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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
XXXXXXXXX INDUSTRIES, INC.,
SOLAIR, INC.
AND
BANNER AEROSPACE, INC.
DECEMBER 5, 1998
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of
December 5, 1998 among Xxxxxxxxx Industries, Inc., a Delaware corporation
("Xxxxxxxxx"), Solair, Inc., a Florida corporation ("Solair") and Banner
Aerospace, Inc., a Delaware corporation (the "Shareholder").
RECITALS
Solair is engaged in the purchase, sale and support of aircraft parts and
the provision of related services. Xxxxxxxxx desires to purchase, and the
Shareholder desires to sell, all of the issued and outstanding shares of capital
stock of Solair, on the terms and subject to the conditions contained in this
Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Acquisition" means the acquisition by Xxxxxxxxx from the
Shareholder of the Shares.
"Actual Designated Costed Inventory Value" as of the Closing Date
means the aggregate of (1) the actual counts of physical items of
Designated Costed Inventory held by Solair as of the Closing Date,
multiplied by (2) the unit cost of such items as reflected on the
books and records of Solair as of the Closing Date.
"Actual Non-Designated Costed Inventory Value" as of the Closing
Date means the aggregate of (1) the actual counts of physical
items of Non-Designated Costed Inventory held by Solair as of the
Closing Date, multiplied by (2) the unit cost of such items as
reflected on the books and records of Solair as of the Closing
Date.
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"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations promulgated under the Exchange
Act, as in effect on the date hereof.
"Book Designated Costed Inventory Value" as of the Closing Date
means (1) the aggregate of (a) the physical items of Designated
Costed Inventory held by Solair as of August 31, 1998 as reflected
on the books and records of Solair as of such date, multiplied by
(b) the unit cost of such items as reflected on the books and
records of Solair as of such date minus (2) the aggregate of (x)
the physical items of Designated Costed Inventory sold by Solair
from August 31, 1998 to the Closing Date, multiplied by (y) the
unit cost of such items as reflected on the books and records of
Solair as of August 31, 1998.
"Book Non-Designated Costed Inventory Value" as of the Closing
Date means (1) the aggregate of (a) the physical items of
Non-Designated Costed Inventory held by Solair as of August 31,
1998 as reflected on the books and records of Solair as of such
date, multiplied by (b) the unit cost of such items as reflected
on the books and records of Solair as of date, minus (2) the
aggregate of (x) the physical items of Non-Designated Costed
Inventory sold by Solair from August 31, 1998 to the Closing Date,
multiplied by (y) the unit cost of such items as reflected on the
books and records of Solair as of August 31, 1998, plus (3) the
aggregate of (e) the physical items of Non-Designated Costed
Inventory purchased by Solair from August 31, 1998 to the Closing
Date, multiplied by (f) the unit cost paid by Solair for such
items.
"Bulk Inventory" means all inventory owned by Solair which does
not constitute Costed Inventory.
"Common Stock" means the shares of common stock, $1.00 par value
per share, of Solair.
"Confidentiality Agreement" means the Confidentiality Agreement
dated as of October 29, 1998 between the Shareholder and
Xxxxxxxxx.
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales
order, commitment, undertaking or obligation, in each case,
whether written or oral, express or implied.
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"Controlling Interest," with respect to any Person, means
ownership or control, directly or indirectly, of more than fifty
percent (50%) of the issued and outstanding capital stock or other
equity interest having ordinary voting power to elect a majority
of the board of directors or other governing body of such Person
(irrespective of whether other securities or equity interests of
such Person shall or might have such voting power upon the
occurrence of any contingency).
"Costed Inventory" means all inventory owned by Solair for which
there is a separate line item reflecting the count and unit cost
therefor on the books and records maintained by Solair.
"Designated Accountants" means KPMG Peat Marwick LLP.
"Designated Costed Inventory" means all Costed Inventory included
in the Designated Inventory.
"Designated Inventory" means the items of Inventory set forth on
Schedule 1.1(a).
"Escrow Agent" means NationsBank, N.A. or such other Person as the
parties may select to serve as Escrow Agent under the Escrow
Agreement.
"Escrow Agreement" means the Escrow Agreement to be entered into
by Xxxxxxxxx, the Shareholder and the Escrow Agent at Closing, in
the form attached hereto as Exhibit A (with such changes as may be
required by the Escrow Agent).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Xxxxxxxxx Guaranty" means a Guaranty of The Xxxxxxxxx Corporation
in the form attached hereto as Exhibit B, with such changes
thereto which may be requested by the banks party to the revolving
credit facility maintained by The Xxxxxxxxx Corporation, which
changes either (i) do not have an adverse effect on the rights of
Xxxxxxxxx under such Guaranty, or (ii) are otherwise acceptable to
Xxxxxxxxx.
"Familial Affiliate," with respect to any person shall mean any
person who is a member of the immediate family of such person and
any entity in which any such person owns a Controlling Interest.
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"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and
any entity or official exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to government.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Income Taxes" means Taxes on or measured by income, whether net
income or gross income, including, without limitation, alternative
minimum Taxes imposed under the Code.
"Indebtedness" means any indebtedness for borrowed money
(including accrued but unpaid interest), whether owed to a bank or
any other Person, remaining payments on capitalized equipment
leases and remaining payments on covenants not to compete, but
excluding operating leases.
"Independent Accountants" means an independent accounting firm of
national reputation which has not performed services for
Xxxxxxxxx, Xxxxxx or the Shareholder, or any of their respective
Affiliates, during the preceding three (3) year period, which is
selected by Xxxxxxxxx and the Shareholder (or if they cannot
agree, which is selected by the Designated Accountants and the
Shareholder Accountants).
"Inventory" means all Bulk Inventory and Costed Inventory.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in
the nature thereof (other than operating leases), and the filing
of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in
connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect)
in financial condition, properties, assets, liabilities, rights,
obligations that exist as of the date of this Agreement, current
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operations or business, which change (or effect) individually or
in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations
or business.
"Modified GAAP" means GAAP, with those modifications and
adjustments set forth on Schedule 1.1(b).
"Net Worth" means the amount if any, by which the aggregate total
assets of Solair exceeds the aggregate total liabilities of
Solair, in each case, determined in accordance with Modified GAAP.
"Non-Designated Costed Inventory" means all Costed Inventory other
than Designated Costed Inventory.
"Non-Income Taxes" means Taxes other than Income Taxes.
"Permitted Liens" means (a) Liens arising by operation of law,
including, without limitation, materialmen's, mechanic's,
workmen's and repairmen's Liens, in each case, securing any
liabilities of Solair (i) which are reflected on the Current
Balance Sheet (as hereinafter defined) and not heretofore paid or
discharged, (ii) incurred in the ordinary course of business
consistent with past practice since the date of the Current
Balance Sheet (none of which relates to breach of contract, breach
of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation
or arbitration proceeding), or (iii) set forth on Schedule 4.11
which were incurred in the ordinary course of business prior to
the date of the Current Balance Sheet and, in accordance with GAAP
consistently applied, were not required to be recorded thereon;
(b) Liens for Taxes not yet due and payable; and (c) Liens for
Taxes which are being contested in good faith and are set forth on
Schedule 1.1(c).
"Permitted Sempati Transaction" means the write-off by Solair on
its books and records of the receivable in the amount of One
Million Three Hundred Twenty Five Thousand Eight Hundred Fifty
Dollars ($1,325,850) currently payable to Solair by P.T. Sempati
Air or Asean Aviation Services, Inc. ("Sempati"), in exchange for
Solair's acquisition from Sempati of certain inventory to be
designated by Solair and Sempati in the agreement to be entered
into between them in connection with the Permitted Sempati
Transaction (the "Sempati Inventory").
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated
association,
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joint venture, Governmental Authority or other entity, of whatever
nature.
"Post-Closing Period" means a Tax period beginning after and
ending after the Closing Date.
"Pre-Closing Period" means a Tax period ending on or prior to the
Closing Date.
"Receivables" means all receivables of Solair reflected on the
Adjusted Closing Date Balance Sheet, including all trade account
receivables arising from the provision of services, sale of
inventory, notes receivable and insurance proceeds receivable.
"SEC" means the Securities and Exchange Commission.
"Shareholder Accountants" means Xxxxxx Xxxxxxxx LLP.
"Shares" means all of the issued and outstanding shares of Common
Stock.
"Straddle Period" means a Tax period beginning on or before, but
ending after, the Closing Date.
"Tax Agreement" means the Tax Agreement to be entered into by the
parties at Closing in the form attached hereto as Exhibit C.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or
information filed with or submitted to or required to be filed
with or submitted to any Governmental Authority in connection with
or with respect to the determination, assessment, collection or
payment of any Taxes.
"Taxes" means all taxes, including, but not limited to, income,
excise, property, sales, franchise, intangible, withholding,
social security and unemployment taxes, levies, assessments,
tariffs, duties (including customs duties), deficiencies or other
fees, imposed, assessed or collected by or under the authority of
any Governmental Authority, or payable pursuant to any tax sharing
agreement or other contract relating to the sharing or payment of
any such tax, levy, assessment, tariff, duty (including customs
duties), deficiency or other fee, and any related charge or
amount, including, but not limited to, any fine, penalty, interest
or additional tax.
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1.2. OTHER DEFINITIONAL PROVISIONS.
1.2.1. All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
1.2.2. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
1.2.3. All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable, except as otherwise specifically provided herein.
1.2.4. As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
1.2.5. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
1.2.6. Whenever the word "hereunder" or "herein" is used in this
Agreement, it shall be deemed to mean "under this Agreement" or "in this
Agreement," respectively.
1.2.7. Whenever this Agreement provides for a payment to be made
by any party, such payment shall be made by wire transfer of immediately
available, United States federal funds, to one or more bank accounts designated
in writing by the recipient thereof.
1.2.8. Whenever any representation or warranty of a corporation
contained herein is qualified by "knowledge", such "knowledge" shall mean the
actual knowledge of the officers and directors of the corporation which is
making such representation or warranty, after reasonable inquiry.
ARTICLE 2.
PURCHASE AND SALE OF SHARES
2.1. THE ACQUISITION. Subject to the terms and conditions of this
Agreement, the Shareholder shall at the Closing (as hereinafter defined) sell,
convey, transfer, assign and deliver to Xxxxxxxxx, and Xxxxxxxxx shall at the
Closing purchase, acquire and accept from the Shareholder, the Shares, free and
clear of any Liens.
2.2. PURCHASE PRICE. The aggregate purchase price to be paid by
Xxxxxxxxx to the Shareholder in exchange for the Shares (the "Purchase Price")
shall consist of:
2.2.1. a payment in the amount of Fifty Seven Million Dollars
($57,000,000), minus the positive amount, if any, by which the Net Worth of
Solair as of the Closing Date (as hereinafter defined) (after taking into
account the write-down provided for in Section 6.21) is less than Fifty Five
Million Seven Hundred Fifty Seven Thousand Eight Hundred and Eighty Two Dollars
($55,757,882), plus the positive amount, if any, by which the Net Worth of
Solair as of the Closing Date (after taking into account the write-down provided
for in Section 6.21) is more than Fifty Five Million Seven Hundred Fifty Seven
Thousand Eight Hundred and Eighty Two Dollars ($55,757,882); and
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2.2.2. a Warrant (the "Warrant") in the form attached hereto as
Exhibit D for the purchase of Three Hundred Thousand (300,000) shares of common
stock, par value $.001 per share, of Xxxxxxxxx (the "Xxxxxxxxx Common Stock") at
a price per share equal to Twenty Seven Dollars and Fifty Cents ($27.50).
2.3. PAYMENT OF ESTIMATED PURCHASE PRICE. At least two days prior to
the Closing Date, Xxxxxxxxx and the Shareholder shall estimate by mutual
agreement the amount of the Purchase Price (the "Estimated Purchase Price"),
which estimate shall be based upon the balance sheet of Solair as of the last
day of the immediately preceding calendar month (or if such balance is not
available, as of the last day of the calendar month preceding such month),
adjusted by Modified GAAP consistent with the methodology used in connection
with the preparation of the Current Balance Sheet (as hereinafter defined). At
the Closing, Xxxxxxxxx shall pay the Estimated Purchase Price, as follows:
2.3.1. Xxxxxxxxx shall deliver to the Escrow Agent the sum of Five
Million Dollars ($5,000,000) (the "Escrowed Amount") to be held in accordance
with Article IX;
2.3.2. Xxxxxxxxx shall pay to the Shareholder the balance of the
Estimated Purchase Price (the "Closing Date Payment"); and
2.3.3. Xxxxxxxxx shall execute and deliver the Warrant to the
Shareholder.
2.4. CLOSING DATE PAYMENT ADJUSTMENT. Within ninety (90) days following
the Closing Date, Xxxxxxxxx shall cause the Designated Accountants to prepare an
audit of the balance sheet of Solair as of the Closing Date (the "Audited
Closing Date Balance Sheet") (prepared in accordance with GAAP on a basis
consistent with the past practices of Solair). The Shareholder shall be entitled
to participate in the conduct of such audit. Upon completion of the audit,
Xxxxxxxxx shall prepare and deliver to the Shareholder a certificate verified as
to accuracy by its Chief Financial Officer (the "Closing Date Payment
Certificate") (i) attaching a copy of the Audited Closing Date Balance Sheet of
Solair, (ii) attaching a copy of the unaudited, internally prepared balance
sheet of Solair as of the Closing Date, which shall be based upon the Audited
Closing Date Balance Sheet, as adjusted by Modified GAAP consistent with the
methodology used in the preparation of the Current Balance Sheet (as hereinafter
defined) (the "Adjusted Closing Date Balance Sheet") and (iii) setting forth the
actual amount of the Purchase Price (which actual amount is referred to as the
"Actual Purchase Price") and the method of calculation thereof in reasonable
detail. Notwithstanding anything to the contrary contained herein, for purposes
of computation of the Adjusted Closing Date Balance Sheet and the Actual
Purchase Price, the amount of receivables carried on the books and records of
Solair shall be increased by the amount of receivables owed to it by Sempati
which are written-off by Solair as a result of or in connection with the
Permitted Sempati Transaction, and the amount at which Inventory is carried on
the books and records of Solair shall be decreased by the difference between the
Sempati Inventory received by Solair in connection with the Permitted Sempati
Transaction and the Sempati Inventory sold by Solair on or prior to the Closing
Date (which shall in each case be valued based upon the amounts shown for each
item of Sempati Inventory on the books and records of Solair). Xxxxxxxxx and the
Shareholder shall share equally any costs or expenses incurred in connection
with the preparation of such Audited Closing Date Balance Sheet. If within sixty
(60) days after the Closing Date Payment Certificate is delivered to the
Shareholder, the Shareholder shall not have given written notice to Xxxxxxxxx
setting forth in detail any objection to the Actual Purchase Price, then such
determination of the Actual Purchase Price shall be final and binding on the
parties hereto. Xxxxxxxxx shall make available to the Shareholder during such
sixty (60) day period the work papers prepared by the Designated Accountants in
the course of the preparation of the Audited Closing Date Balance Sheet and the
work papers for the preparation of the Adjusted Closing Date Balance Sheet. If
the Shareholder, within such sixty (60) day period following delivery of the
Closing Date Payment Certificate, shall give written notice to Xxxxxxxxx setting
forth in reasonable detail any objection to such determination of the Actual
Purchase Price, Xxxxxxxxx and the Shareholder shall endeavor to reach agreement
within the thirty (30) day period following the receipt by Xxxxxxxxx of the
notice of objection. If the parties are unable to reach agreement within such
thirty (30) day period, then the matter shall be submitted to the Independent
Accountants for determination of those issues as to which the parties shall have
been unable to reach agreement in connection with the calculation of the Actual
Purchase Price, which determination shall be final and binding on the parties.
Xxxxxxxxx and the Shareholder shall share equally any costs or expenses of
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the Independent Accountants incurred in connection with the determination of
such issues. If the Estimated Purchase Price is greater than the Actual Purchase
Price, then the Shareholder shall repay to Xxxxxxxxx within ten (10) business
days following receipt of the Closing Date Payment Certificate or, if disputed,
within ten (10) business days following the earlier of the date on which the
parties resolve the dispute or the date of determination of the issues certified
to the Independent Accountants, the difference between the Estimated Purchase
Price and the Actual Purchase Price. If the Shareholder shall fail to pay such
amount when due, then Xxxxxxxxx shall have the right (but not the obligation),
in addition to any other remedies which it may have, to deem such amount to be
Xxxxxxxxx Indemnifiable Damages in accordance with Article IX (provided that the
Xxxxxxxxx Indemnification Threshold shall not be applicable to such amount and
such amount shall not count against the Xxxxxxxxx Indemnification Cap). If the
Actual Purchase Price is greater than the Estimated Purchase Price, then
Xxxxxxxxx shall pay to the Shareholder within ten (10) business days following
receipt of the Closing Date Payment Certificate or, if disputed, within ten (10)
business days following the earlier of the date on which the parties resolve
their dispute or the date of determination of the issues certified to the
Independent Accountants, the difference between the Actual Purchase Price and
the Estimated Purchase Price. If Xxxxxxxxx shall fail to pay such amount when
due, then the Shareholder shall have the right (but not the obligation), in
addition to any other remedies which it may have, to deem such amount to be
Shareholder Indemnifiable Damages in accordance with Article IX (provided that
the Shareholder Indemnification Threshold shall not be applicable to such amount
and such amount shall not count against the Shareholder Indemnification Cap).
2.5. THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Acquisition (the "Closing") shall take place
on December 31, 1998, or if all of the conditions set forth in Articles VII and
VIII shall not have been satisfied or waived as of such date, as promptly as
practicable (and in any event within five (5) business days) after satisfaction
or waiver of the conditions set forth in Articles VII and VIII, at the offices
of Akerman, Senterfitt & Xxxxxx, P.A., Ft. Lauderdale, Florida, or such other
time and place as the parties may otherwise agree (the "Closing Date").
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX
As a material inducement to the Shareholder to enter into this Agreement
and to consummate the transactions contemplated hereby, Xxxxxxxxx makes the
following representations and warranties to the Shareholder:
3.1. CORPORATE STATUS. Xxxxxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2. CORPORATE POWER AND AUTHORITY. Xxxxxxxxx has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Xxxxxxxxx has
taken all actions necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
3.3. ENFORCEABILITY. This Agreement has been duly executed and
delivered by Xxxxxxxxx and constitutes a legal, valid and binding obligation of
Xxxxxxxxx, enforceable against Xxxxxxxxx in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4. NO VIOLATION. Except as set forth in Schedule 3.4, neither the
execution or delivery of this Agreement by Xxxxxxxxx, the performance by
Xxxxxxxxx of its obligations hereunder or the consummation by it of
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the transactions contemplated by this Agreement will (i) contravene any
provision of the Certificate of Incorporation or Bylaws (or other organizational
documents) of Xxxxxxxxx, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against Xxxxxxxxx except where such failure to
comply would not have a Material Adverse Effect on Xxxxxxxxx, (iii) conflict
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Xxxxxxxxx, (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of the property or assets of Xxxxxxxxx or (v)
require the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person who or which is a party to any Contract to which Xxxxxxxxx is a party,
except any SEC and other filings required to be made by Xxxxxxxxx or the
Shareholder and any filings required to be made by the parties under the HSR
Act, if any.
3.5. NO COMMISSIONS. Xxxxxxxxx has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby, other than (a) fees
payable to Helix Management Company II, LLC, and (b) any other fees which
Xxxxxxxxx has agreed or agrees to pay to any Person, all of which will be paid
by, and be the sole obligation of, Xxxxxxxxx.
3.6. INVESTMENT REPRESENTATIONS.
3.6.1. Xxxxxxxxx is an accredited investor as such term is defined
in Rule 501 of the General Rules and Regulations under the Securities Act of
1933, as amended (the "Securities Act") and has such knowledge and experience in
financial and business matters, including, without limitation, in the aviation
parts business, that it is capable of evaluating the merit and risks of the
acquisition of the Shares.
3.6.2. Xxxxxxxxx has provided the Shareholder and Solair with Due
Diligence Request Lists (copies of which are attached hereto as Schedule 3.6)
setting forth the categories of information and documents which it believes
appropriate to review in connection with the acquisitions of the Shares, and has
reviewed those materials provided by the Shareholder and Solair in response
thereto and has participated in discussions with the senior management team of
Solair and representatives of the Shareholder.
3.6.3. The Shares will be acquired by Xxxxxxxxx for its own
account for investment only and not with a view to, or with any intention of, a
distribution or resale thereof, in whole or part, or the grant of any
participation therein.
3.6.4. Xxxxxxxxx acknowledges that (i) the Shares have not been
registered under the Securities Act or state securities laws by reason of a
specific exemption or exemptions from registration under the Securities Act and
applicable state securities laws and that certificates representing the Shares
may bear a legend to such effect, (ii) the Shareholder's reliance on such
exemptions is predicated in part on the accuracy and completeness of the
representations and warranties of Xxxxxxxxx contained herein, (iii) such Shares,
therefore, cannot be resold unless registered under the Securities Act and
applicable state securities laws, or unless an exemption from registration is
available, (iv) there is no public market for such Shares, (v) no federal or
state agency has recommended or endorsed the purchase of the Shares, and (vi)
and Xxxxxxxxx will not be able to readily liquidate an investment in the Shares.
3.7. SEC DOCUMENTS. Xxxxxxxxx has delivered to the Shareholder copies
of the following filings made by it with the SEC: (i) Xxxxxxxxx'x Annual Report
on Form 10-K for the fiscal year ended December 31, 1997, (ii) Xxxxxxxxx'x
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998, (iii) Xxxxxxxxx'x Current Reports on Form
8-K filed with the SEC on February 27, 1998, April 14, 1998, May 18, 1998 and
June 30, 1998 and (iv) Xxxxxxxxx'x proxy statement relating to its annual
meeting of shareholders held on May 29, 1998 (collectively, the "SEC Reports").
As of their respective dates, the SEC Reports
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complied in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF
SOLAIR AND THE SHAREHOLDER
As a material inducement to Xxxxxxxxx to enter into this Agreement and to
consummate the transactions contemplated hereby, Solair and the Shareholder,
jointly and severally, make the following representations and warranties to
Xxxxxxxxx:
4.1. CORPORATE STATUS. Solair is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has the
requisite corporate power and authority to own or lease its properties and to
carry on its business as now being conducted. Solair is legally qualified to
transact business as a foreign corporation, and is in good standing as such, in
each of the jurisdictions in which the nature of its properties and/or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect on Solair. Schedule 4.1
sets forth (i) each of the jurisdictions in which Solair is legally qualified to
transact business as a foreign corporation and (ii) each of the names under
which Solair has at any time done business. Solair has fully complied in all
material respects with all of the requirements of any statute governing the use
and registration of fictitious names, and has the legal right to use the names
under which it operates its business. Except as set forth on Schedule 4.1,
Solair has not changed its name or used any assumed or fictitious name other
than those listed on Schedule 4.1, or been the surviving entity in a merger,
acquired any businesses or changed its principal place of business or chief
executive office, in each case, since the date of its organization. There is no
pending or, to the knowledge of Solair or the Shareholder, threatened proceeding
for the dissolution, liquidation, insolvency or rehabilitation of Solair.
4.2. POWER AND AUTHORITY. Each of Solair and the Shareholder has the
corporate power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of Solair and the Shareholder has taken all action
necessary to authorize the execution and delivery of this Agreement, the
performance of its respective obligations hereunder and the consummation of the
transactions contemplated hereby.
4.3. ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of Solair and the Shareholder, and constitutes the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
4.4. CAPITALIZATION. Solair has (a) 7,500 shares of Common Stock
authorized and no other shares of any class of capital stock authorized, (b) 800
shares of Common Stock issued and outstanding, and (c) no shares of Common Stock
held in treasury. All of the issued and outstanding shares of capital stock of
Solair (i) have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) were issued in compliance with all applicable state and
federal securities laws, and (iii) were not issued in violation of any
preemptive rights or rights of first refusal. No preemptive rights or rights of
first refusal exist with respect to the shares of capital stock of Solair, and
no such rights arise by virtue of or in connection with the transactions
contemplated hereby. There are no outstanding or authorized rights, options,
warrants, convertible securities, subscription rights, conversion rights,
exchange rights or other agreements or commitments of any kind that could
require Solair to issue or sell any shares of its capital stock (or securities
convertible into or exchangeable for shares of its capital stock). There are no
13
outstanding stock appreciation, phantom stock, profit participation or other
similar rights with respect to Solair. There are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer of the
capital stock of Solair. Solair is not obligated to redeem or otherwise acquire
any of its outstanding shares of capital stock.
4.5. SHAREHOLDERS. The Shareholder is the holder of all issued and
outstanding shares of capital stock of Solair, and, except as set forth in
Schedule 4.5 or as may be imposed under federal or state securities laws on all
issuers of securities generally, the Shareholder owns such shares free and clear
of all Liens, restrictions and claims of any kind.
4.6. NO VIOLATION. Except as set forth in Schedule 4.6, neither the
execution or delivery of this Agreement by Solair or the Shareholder, the
performance by either of them of their respective obligations hereunder or the
consummation by either of them of the transactions contemplated by this
Agreement will (i) contravene any provision of the Articles of Incorporation or
Bylaws (or other organizational documents) of Solair or the Shareholder, (ii)
violate or conflict with any law, statute, ordinance, rule, regulation, decree,
writ, injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against either Solair or the Shareholder except where such failure to comply
would not have a Material Adverse Effect on Solair or the Shareholder, (iii)
conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Designated Contract (as hereinafter defined)
which is binding upon or enforceable against either Solair or the Shareholder,
(iv) result in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of either Solair or the Shares or (v)
require the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal, or any
Person who or which is a party to any of the Designated Contracts, except any
SEC and other filings required to be made by Xxxxxxxxx or the Shareholder and
any filings required to be made by the parties under the HSR Act, if any.
4.7. RECORDS OF SOLAIR. The copies of the Articles of Incorporation and
Bylaws of Solair which were provided to Xxxxxxxxx are true, accurate and
complete and reflect all amendments made through the date of this Agreement. The
minute books for Solair made available to Xxxxxxxxx for review were correct and
complete in all material respects as of the date of such review, no further
entries have been made through the date of this Agreement, such minute books
contain the true signatures of the persons purporting to have signed them, and
each such minute book contains an accurate record of all material corporate
actions of the shareholders and directors (and any committees thereof) of Solair
taken by written consent or at a meeting since the date of its organization. All
material corporate actions taken by Solair have been duly authorized or
ratified. All non-financial accounts, books, ledgers and official and other
records of Solair have been fully, properly and accurately kept and completed in
all respects, and there are no inaccuracies or discrepancies of any kind
contained therein. The stock ledgers of Solair, as previously made available to
Xxxxxxxxx, contain complete and accurate records of all issuances, transfers and
cancellations of shares of the capital stock of Solair.
4.8. SUBSIDIARIES. Solair does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or control, any
corporation, partnership, joint venture or other business entity other than
Banner Aerospace (U.K.) Limited, a corporation organized under the laws of the
United Kingdom, which is wholly-owned by Solair and Xxxxxx Xxxxxxxxx. Except as
set forth in Schedule 4.5 or as may be imposed under federal or state securities
laws on all issuers of securities generally, Solair and Xxxxxx Xxxxxxxxx own the
outstanding shares of capital stock of Banner Aerospace (U.K.) Limited free and
clear of all Liens, restrictions and claims of any kind. Banner Aerospace (U.K.)
Limited serves only as a sales office for Solair, employs approximately six (6)
persons, owns no material assets, and has no Indebtedness.
4.9. FINANCIAL STATEMENTS. The Shareholder has delivered to Xxxxxxxxx
the unaudited, internally-prepared financial statements of Solair for the years
ended March 31, 1996, March 31, 1997, and March 31, 1998 (collectively, the
"Annual Financial Statements"), and an unaudited, internally-prepared balance
sheet of Solair dated as of August 31, 1998 (the "Current Balance Sheet" and,
together with the Annual Financial Statements, the
14
"Financial Statements"), copies of which are attached to Schedule 4.9 hereto.
The Annual Financial Statements fairly present the financial position of Solair
at the balance sheet date and the results of operations for the periods covered
thereby, and except as disclosed in Schedule 4.9 have been prepared in
accordance with GAAP consistently applied throughout the periods indicated. The
Current Balance Sheet has been prepared in accordance with Modified GAAP. Except
as set forth in Schedule 4.9, there are no extraordinary items of income or
expense during the periods covered by the Annual Financial Statements and the
balance sheets included in the Financial Statements do not reflect any writeup
or revaluation increasing the book value of any assets. The references to
"Future Tax Benefits" on the Financial Statements refer to the future Federal
and State Tax benefits accrued by Solair (assuming, for purposes of such
accrual, the highest Federal and State marginal tax rates).
4.10. CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set forth
in Schedule 4.10, since the date of the Current Balance Sheet, Solair has not
(i) issued any capital stock or other securities; (ii) made any distribution of
or with respect to its capital stock or other securities, or purchased or
redeemed any of its securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or, other than in the ordinary course of
business consistent with past practice, its salaried employees, or amended any
other terms of employment of officers, or other than in the ordinary course of
business consistent with the past practice, its salaried employees; (iv) sold,
leased or transferred any of its properties or assets other than in the ordinary
course of business consistent with past practice; (v) made or obligated itself
to make capital expenditures out of the ordinary course of business consistent
with past practice; (vi) made any payment in respect of its liabilities other
than in the ordinary course of business consistent with past practice; (vii)
incurred any obligations or liabilities (including any Indebtedness) or entered
into any transaction or series of transactions involving in excess of $50,000 in
the aggregate out of the ordinary course of business, except for this Agreement
and the transactions contemplated or permitted hereby; (viii) suffered any
theft, damage, destruction, casualty loss or extraordinary loss, whether or not
covered by insurance, in excess of $50,000 in the aggregate (provided, however,
Solair shall not for purposes of Section 7.1 of this Agreement be deemed in
material breach of this representation and warranty unless such amount shall
exceed One Million Dollars ($1,000,000); (ix) waived, canceled, compromised or
released any rights having a value in excess of $50,000 in the aggregate; (x)
made or adopted any change in its accounting practice or policies; (xi) made any
adjustment to its books or records other than in respect of the conduct of its
business activities in the ordinary course consistent with past practice; (xii)
to the knowledge of Solair or the Shareholder, entered into any transaction with
(a) any Affiliate, or (b) any officer or director of Solair or the Shareholder
or (c) any Familial Affiliate of any officer or director of Solair or the
Shareholder, other than intercompany transactions between Solair and the
Shareholder in the ordinary course of business consistent with past practice;
(xiii) entered into any employment agreement; (xiv) terminated, amended or
modified any Designated Contract; (xv) imposed any security interest or other
Lien on any of its assets other than in the ordinary course of business
consistent with past practice; (xvi) delayed paying any accounts payable which
are due and payable except to the extent being contested in good faith, other
than in the ordinary course of business consistent with past practice; (xvii)
made or pledged any charitable contribution in excess of $10,000; (xviii)
entered into any other transaction or been subject to any event other than in
the ordinary course of business consistent with past practice; or (xix) agreed
to do or authorized any of the foregoing.
4.11. LIABILITIES OF SOLAIR AND BANNER AEROSPACE (U.K.) LIMITED. Except
as set forth in Schedule 4.11, neither Solair nor Banner Aerospace (U.K.)
Limited has any liabilities or obligations, whether accrued, absolute,
contingent or otherwise, except (a) to the extent reflected on the Current
Balance Sheet and not heretofore paid or discharged, (b) liabilities incurred in
the ordinary course of business consistent with past practice since the date of
the Current Balance Sheet (none of which relates to breach of contract, breach
of warranty, tort, infringement or violation of law, or which arose out of any
action, suit, claim, governmental investigation or arbitration proceeding), and
(c) liabilities set forth on Schedule 4.11 which were incurred in the ordinary
course of business prior to the date of the Current Balance Sheet and which, in
accordance with GAAP consistently applied, were not required to be recorded
thereon. Schedule 4.11 is a true and complete list of Indebtedness of Solair,
including the name of the lender, pay-off amount, per diem interest and any
prepayment penalties or premiums. As of the Closing Date, Solair shall have no
Indebtedness.
15
4.12. LITIGATION. Except as disclosed on Schedule 4.12 hereto, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending, or, to the knowledge of Solair or the Shareholder,
threatened, anticipated or contemplated (i) by or against Solair, or any of its
properties or assets, (ii) affecting Solair, or any of its properties or assets,
other than any such action, suit, proceeding, or investigation generally
affecting participants in the industry in which Solair operates, or (iii) which
relates to or questions the validity or enforceability of this Agreement or the
transactions contemplated hereby. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which
Solair is or was a party which have not been complied with in full or which
continue to impose any obligations on Solair.
4.13. ENVIRONMENTAL MATTERS.
4.13.1. Solair (as defined in clause (g) below) is and has at all
times been in full compliance with all Environmental Laws (as defined in clause
(g) below) governing its business, operations, properties and assets, including,
without limitation: (i) all requirements relating to the Discharge (as defined
in clause (g) below) and Handling (as defined in clause (g) below) of Hazardous
Substances (as defined in clause (g) below); (ii) all requirements relating to
notice, record keeping and reporting; (iii) all requirements relating to
obtaining and maintaining Licenses (as defined in clause (g) below) for the
ownership and/or use of its properties and assets and the operation of its
business as presently conducted, including Licenses relating to Hazardous
Substances; and (iv) all applicable writs, orders, judgements, injunctions,
governmental communications, decrees, informational requests or demands issued
pursuant to, or arising under, any Environmental Laws.
4.13.2. There are no (and, to the knowledge of each of Solair and
the Shareholder, there is no basis for any) non-compliance orders, warning
letters, notices of violation (collectively "Notices"), claims, suits, actions,
judgments, penalties, fines, or administrative or judicial investigations or
proceedings (collectively "Proceedings") pending or threatened against or
involving Solair or its respective businesses, operations, properties, or
assets, issued by any Governmental Authority or third party with respect to any
Environmental Laws or Licenses issued to Solair thereunder in connection with,
related to or arising out of the ownership by Solair or its properties or assets
or the operation of their respective businesses, which have not been resolved to
the satisfaction of the issuing Governmental Authority or third party in a
manner that would not impose any obligation, burden or continuing liability on
Xxxxxxxxx or Solair in the event that the transactions contemplated by this
Agreement are consummated, or which could have a Material Adverse Effect on
Xxxxxxxxx or Solair including, without limitation: (i) Notices or Proceedings
related to Solair being a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under any applicable
Environmental Laws; (ii) Notices or Proceedings relating to Solair being
responsible to undertake any response or remedial actions or clean-up actions
under any applicable Environmental Law; or (iii) Notices or Proceedings related
to Solair being liable under any Environmental Laws for personal injury,
property damage, natural resource damage, or assessment or clean up obligations.
4.13.3. Except as identified in any audit assessment or study
listed in Schedule 4.13, Solair has not Handled or Discharged, nor has it
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances to, at or upon: (i) any location other than a site lawfully permitted
to receive such Hazardous Substances; (ii) any real property currently or
previously owned or leased by Solair; or (iii) any site which, pursuant to any
Environmental Laws, (iv) has been placed on the National Priorities List or its
state equivalent, or (v) the Environmental Protection Agency or the relevant
state agency or other Governmental Authority has notified Solair that such
Governmental Authority has proposed or is proposing to place on the National
Priorities List or its state equivalent. There has not occurred, nor is there
presently occurring, a Discharge, or threatened Discharge, of any Hazardous
Substance on, into or beneath the surface of, or adjacent to, any real property
currently or previously owned or leased by Solair in an amount requiring a
notice or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws.
4.13.4. The audits, assessment or studies listed in Schedule 4.13
identify the operations and activities, and locations thereof, which have been
conducted or are being conducted by Solair on any real property currently or
previously owned or leased by Solair which have involved the Handling or
Discharge of Hazardous Substances.
16
4.13.5. Solair has not and does not use any Aboveground Storage
Tanks (as defined in clause (g) below) or Underground Storage Tanks (as defined
in clause (g) below), and there are not now nor have there ever been any
Underground Storage Tanks beneath any real property currently owned or leased by
Solair, or during Solair's ownership or lease, at any real property previously
owned or leased by Solair.
4.13.6. Schedule 4.13 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by Solair or the
Shareholder or any of their agents or, to the knowledge of Solair or
Shareholder, undertaken by any Governmental Authority or any third party,
relating to or affecting Solair or any real property currently or previously
owned or leased by Solair or Shareholder; (ii) the results of any ground, water,
surface water, soil, sediment, air or asbestos monitoring undertaken by Solair
or any of its agents or, to the best of Solair's and Shareholder's knowledge,
undertaken by any Governmental Authority or any third party, relating to or
affecting Solair or any real property currently or previously owned or leased by
Solair which indicate the presence of Hazardous Substances at levels requiring a
notice or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws; (iii) all material written communications between
Solair and any Governmental Authority arising under or related to Environmental
Laws; and (iv) all outstanding citations issued under OSHA, or similar state or
local statutes, laws, ordinances, codes, rules, regulations, orders, ruling, or
decrees, relating to or affecting Solair or any real property currently owned or
leased by Solair or during Solair's ownership or lease, any real property
previously owned or leased by Solair.
4.13.7. Solair has caused that certain 55-gallon drum previously
located at Solair's Fort Lauderdale property, as described in the Phase I
Environmental Site Assessment dated May 1, 1995 and disclosed on Schedule 4.13,
to have been properly removed and disposed of prior to the date hereof in
accordance with applicable Environmental Laws.
4.13.8. For purposes of this Section 4.13, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 et seq., as amended, of RCRA, or any applicable
state or local statute, law, ordinance, code, rule, regulation, order
ruling, or decree governing Aboveground Storage Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be
defined in any Environmental Law, into any medium including, without
limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, injunctions, decrees,
rulings and ordinances, and changes thereof, or similar laws of foreign
jurisdictions where Solair conducts business, whether currently in
existence or hereafter enacted or promulgated, any of which govern or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety, as any of
these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, injunctions, decrees, rulings and ordinances,
or changes thereof, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the
17
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq. (collectively "CERCLA"); the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Section 6901 et seq. (collectively "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the
Clean Water Act, as amended, 33 U.S.C. Section 1311, et seq.; the Clean
Air Act, as amended (42 U.S.C. Section 7401-7642); the Toxic Substances
Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section
136-136y ("FIFRA"); the Emergency Planning and Community Right-to-Know
Act of 1986 as amended, 42 U.S.C. Section 11001, et seq. (Title III of
XXXX) ("EPCRA"); and the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. Section 651, et seq. ("OSHA").
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may be defined in any
Environmental Law, of any Hazardous Substances or Waste.
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed or
controlled by, under or pursuant to any Environmental Laws.
"Licenses" means all licenses, certificates, permits, approvals
and registrations.
"Solair" means Solair and its subsidiaries.
"Underground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 et seq., as amended, of RCRA, or any applicable
state or local statute, law, ordinance, code, rule, regulation, order
ruling, or decree governing Underground Storage Tanks.
4.14. REAL ESTATE.
4.14.1. Solair does not own any real property or any interest
therein.
4.14.2. Schedule 4.14 sets forth a list of all leases, licenses or
similar agreements of or relating to real property (collectively, "Leases") to
which Solair is a party (copies of which have previously been furnished to
Xxxxxxxxx), in each case setting forth (A) the lessor and lessee thereof and the
date and term of each of the Leases, and (B) the street address of each property
covered thereby (the "Leased Premises"). The Leases are in full force and effect
and have not been amended. Solair is not in default or breach under any such
Lease and, to the
18
knowledge of Solair and the Shareholder, no other party thereto is in default or
breach under any such Lease. No event has occurred which, with the passage of
time or the giving of notice or both, would cause a breach by Solair of or
default by Solair under any of such Leases or, to the knowledge of Solair or the
Shareholder, would cause a breach by any other party or a default by any other
party under any of such Leases. To the knowledge of Solair and the Shareholder,
there is no anticipated breach by any other party to any Lease. Except as set
forth in Schedule 4.14, with respect to each of the Leased Premises:
4.14.2.1. Solair has valid leasehold interests in the
Leased Premises, free and clear of any Liens, created by Solair or of
which Solair or the Shareholder has knowledge; and
4.14.2.2. The portions of the buildings located on the
Leased Premises that are used in the business of Solair are in the
aggregate sufficient to satisfy the current normal business activities
of Solair as conducted thereat.
4.14.3. Neither Solair nor the Shareholder has received notice of
(A) any condemnation proceeding with respect to any portion of any of the
Leased Premises or any access thereto, and, to the knowledge of Solair and the
Shareholder, no such proceeding is contemplated by any Governmental Authority;
or (B) any special assessment which may affect any of the Leased Premises.
4.14.4. As of the date hereof, Solair does not have any office or
place of business other than as identified on Schedule 4.14 and Solair's
principal place of business and chief executive offices are indicated on
Schedule 4.14, and, except for equipment leased to customers in the ordinary
course of business, all locations where the equipment, inventory, chattel paper
and books and records of Solair are located as of the date hereof are fully
identified on Schedule 4.14.
4.15. GOOD TITLE TO AND CONDITION OF ASSETS.
4.15.1. Schedule 4.15(a) contains a list of all Costed Inventory
as of August 31, 1998 ("August Costed Inventory"), and the respective count and
unit cost of each item, in each case, as reflected on the books and records of
Solair. Except as set forth on Schedule 4.15, Solair has good and marketable
title to all of its Inventory and other Assets (as hereinafter defined), free
and clear of any Liens other than Permitted Liens. For purposes of this
Agreement, the term "Assets" means all of the properties and assets of Solair
(other than the Leased Premises) whether personal or mixed, tangible or
intangible, wherever located. Except as set forth in Schedule 4.15, Solair does
not own any aircraft (other than aircraft which have been parted out) or
aircraft engines.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, AT CLOSING,
XXXXXXXXX SHALL BE DEEMED TO ACKNOWLEDGE THAT NEITHER SOLAIR NOR THE SHAREHOLDER
HAVE MADE NOR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR PARTICULAR USE OR
PURPOSE, DESIGN CONDITION OR TRACEABILITY OF, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP IN, THE INVENTORY (WHICH ARE BEING ACQUIRED ON AN "AS
IS" "WHERE IS" BASIS), AND SOLAIR AND THE SHAREHOLDER DISCLAIM AND XXXXXXXXX
HEREBY WAIVES ALL SUCH WARRANTIES, ARISING BY LAW OR OTHERWISE, AS TO THE
PHYSICAL CONDITION OF THE INVENTORY, INCLUDING BUT NOT LIMITED TO, ANY AND ALL
DEFECTS, WHETHER OBVIOUS, LATENT OR UNDISCOVERABLE.
19
4.15.2. Schedule 4.15(b) lists the vehicles owned, leased or used
by Solair, setting forth the make, model, vehicle identification number, and
year of manufacture, and for each vehicle, whether it is owned or leased, and if
owned, the name of any lienholder and the amount of the lien, and if leased, the
name of the lessor.
4.16. COMPLIANCE WITH LAWS.
4.16.1. Solair is and has been in compliance with all laws,
regulations and orders applicable to it, its properties and assets (excluding
Inventory), in each case whether owned or used by it now or in the past, and its
business and operations as conducted by it now and in the past. Solair has not
been cited, fined or otherwise notified of any asserted past or present failure
to comply with any laws, regulations or orders and no proceeding with respect to
any such violation is pending or, to the knowledge of Solair or the Shareholder,
threatened.
4.16.2. Neither Solair nor any of its employees or agents has made
any payment of funds in connection with the business of Solair which is
prohibited by law, and no funds have been set aside to be used in connection
with the business of Solair for any payment prohibited by law.
4.16.3. Solair is and at all times has been in compliance with the
terms and provisions of the Immigration Reform and Control Act of 1986, as
amended (the "Immigration Act"). With respect to each Employee (as defined in 8
C.F.R. 274a.1(f)) of Solair for whom the compliance with the Immigration Act is
required, Solair has on file a true, accurate and complete copy of (i) each
Employee's Form I-9 (Employment Eligibility Verification Form) and (ii) all
other records, documents or other papers prepared, procured and/or retained
pursuant to the Immigration Act. Solair has not been cited, fined, served with a
Notice of Intent to Fine or with a Cease and Desist Order, nor has any action or
administrative proceeding been initiated or threatened against Solair, by the
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
4.16.4. Except as set forth in Schedule 4.16, Solair is not
subject to any contract, decree or injunction which restricts the continued
operation of Solair or the expansion thereof to other geographical areas,
customers and suppliers or lines of business.
4.17. LABOR AND EMPLOYMENT MATTERS. Schedule 4.17 sets forth the name,
address, social security number and current rate of compensation of each of the
employees of Solair. Solair is not a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and there has
been no effort by any labor union during the twenty-four (24) months prior to
the date hereof to organize any employees of Solair into one or more collective
bargaining units. There is no pending or, to the knowledge of Solair or the
Shareholder, threatened labor dispute, strike or work stoppage which affects or
which may affect the business of Solair or which may interfere with its
continued operations. Neither Solair nor any agent, representative or employee
of Solair has within the last twenty-four (24) months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or, to the knowledge of Solair or the Shareholder, threatened
charge or complaint against Solair by or with the National Labor Relations Board
or any representative thereof. There has been no strike, walkout or work
stoppage or threat of union activity involving any of the employees of Solair
during the twenty-four (24) months prior to the date hereof. The Shareholder has
no knowledge that any executive or employee has any plans to terminate his or
her employment with Solair as a result of the Acquisition. Solair has complied
with applicable laws, rules and regulations relating to employment, civil rights
and equal employment opportunities, including but not limited to, the Civil
Rights Act of 1964, the Fair Labor Standards Act, the Americans with
Disabilities Act, as amended, and the Immigration Reform and Control Act of
1986, as amended.
4.18. EMPLOYEE BENEFIT PLANS.
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4.18.1. Employee Benefit Plans. Schedule 4.18 contains a list
setting forth each employee benefit plan or arrangement of Solair, including but
not limited to employee pension benefit plans, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare
benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents participate ("Employee Benefit Plans") (true and
accurate copies of which, together with the most recent annual reports on Form
5500 and summary plan descriptions with respect thereto, were furnished to
Xxxxxxxxx).
4.18.2. Multi Employer Plans and Multiple Employer Plans. Solair,
the Shareholder, and any entity that would be aggregated with Solair or the
Shareholder under the Internal Revenue Code of 1986, as amended (the "Code"),
Section 414(b), (c), (m) or (o), do not currently participate in and have not,
during the ten (10) year period ending on the Closing Date, participated in and
are not and have not been required to or otherwise participate in any "multi
employer plan," as defined in Sections 3(37)(A) and 4001(a)(3) of ERISA and
Section 414(f) of the Code or any "multiple employer plan" within the meaning of
Section 210(a) of ERISA or Section 413(c) of the Code.
4.18.3. Defined Benefit Plans, Funding Standards and Title IV of
ERISA. No Employee Benefit Plan is or at any time during the ten (10) year
period ending on the Closing Date was a "defined benefit plan" as defined in
Section 3(35) of ERISA or a pension plan subject to the funding standards of
Section 302 of ERISA or Section 412 of the Code. Solair, the Shareholder, and
any entity that would be aggregated with Solair or the Shareholder under Code
Section 414(b), (c), (m) or (o) do not participate currently and have not at any
time during the ten (10) year period ending on the Closing Date participated in
and are not required currently and have not at any time during the ten (10) year
period ending on the Closing Date been required to contribute to or otherwise
participate in any plan, program or arrangement subject to Title IV of ERISA.
4.18.4. Compliance with Law. With respect to each Employee Benefit
Plan, (i) each has been administered in all material respects in compliance with
its terms and with all applicable laws, including, but not limited to, ERISA and
the Code; (ii) other than routine claims for benefits, no actions, suits, claims
or disputes are pending, or, to the knowledge of Solair or the Shareholder,
threatened; (iii) no audits, inquiries, reviews, proceedings, claims, or demands
are pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any liability in the event of any such investigation,
claim, action, suit, audit, review, or other proceeding; (v) all material
reports, returns, and similar documents required to be filed with any
governmental agency or distributed to any plan participant have been duly or
timely filed or distributed; and (vi) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code.
4.18.5. Qualified Plans. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a) or 403(a), (i) the Internal
Revenue Service has issued a favorable determination letter, true and correct
copies of which have been furnished to Xxxxxxxxx, that such plans are qualified
and exempt from federal income taxes; (ii) no such determination letter has been
revoked nor has revocation been threatened, nor has any amendment or other
action or omission occurred with respect to any such plan since the date of its
most recent determination letter or application therefor which would adversely
affect its qualification or materially increase its costs; (iii) all
contributions to, and payments from and with respect to such plans, which may
have been required to be made in accordance with such plans have been timely
made; and (iv) all such contributions to the plans, and all payments under the
plans (except those to be made from a trust qualified under Section 401(a) of
the Code) and all payments with respect to the plans for any period ending
before the Closing Date that are not yet, but will be, required to be made are
properly accrued and reflected on the Current Balance Sheet.
4.18.6. Welfare Plans. (i) Solair is not obligated under any
employee welfare benefit plan as described in Section 3(1) of ERISA ("Welfare
Plan") to provide medical or death benefits with respect to any
21
employee or former employee of Solair or its predecessors after termination of
employment, except as may otherwise be required by law; (ii) Solair has complied
with the notice and continuation coverage requirements of Section 4980B of the
Code and the regulations thereunder with respect to each Welfare Plan that is,
or was during any taxable year for which the statute of limitations on the
assessment of federal income taxes remains, open, by consent or otherwise, a
group health plan within the meaning of Section 5000(b)(1) of the Code; and
(iii) there are no reserves, assets, surplus or prepaid premiums under any
Welfare Plan which is an Employee Benefit Plan. Except a set forth in Schedule
4.18 the consummation of the transactions contemplated by this Agreement will
not entitle any individual to severance pay, and will not accelerate the time of
payment or vesting, or increase the amount of compensation, due to any
individual, other than payments or vesting under a qualified plan.
4.18.7. Controlled Group Liability. Neither Solair nor any entity
that would be aggregated with it under Code Section 414(b), (c), (m) or (o),
(i), during the ten (10) year period ending on the Closing Date, has ever
terminated or withdrawn from any employee benefit plan under circumstances
resulting (or expected to result) in liability to the Pension Benefit Guaranty
Corporation ("PBGC"), the fund by which the employee benefit plan is funded, or
any employee or beneficiary for whose benefit the plan is or was maintained
(other than routine claims for benefits); (ii) has any assets subject to (or
expected to be subject to) a lien for unpaid contributions to any employee
benefit plan; (iii) has failed to pay premiums to the PBGC when due; (iv) is
subject to (or, to the knowledge of Solair or the Shareholder, will be subject
to) an excise tax under Code Section 4971; (v) has engaged in any transaction
which would give rise to liability under Section 4069 or Section 4212(c) of
ERISA; or (vi) has violated Code Section 4980B or Section 601 through 608 of
ERISA.
4.18.8. Other Liabilities. (i) Except as set forth on Schedule
6.20, none of the Employee Benefit Plans obligates Solair to pay separation,
severance, termination or similar benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change of control"
(as such term is defined in Section 280G of the Code); (ii) all required or
discretionary (in accordance with historical practices) payments, premiums,
contributions, reimbursements, or accruals for all periods ending prior to or as
of the Closing Date shall have been made or properly accrued on the Current
Balance Sheet or will be properly accrued on the books and records of Solair as
of the Closing Date; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance Sheet or the
books and records of Solair.
4.19. TAX MATTERS.
The representations and warranties set forth in this Section 4.19
are subject to exceptions listed in Schedule 4.19 and which reference the
lettered paragraphs below to which the exceptions relate.
4.19.1. Solair has, or to the knowledge of the Shareholder, the
Shareholder and its Subsidiaries (including Solair) have, filed or will cause to
be filed, within the time and within the manner prescribed by law, all federal,
state and local and foreign Tax Returns which are required to be filed by or
with respect to Solair and such Tax Returns reflect accurately in all material
respects the Tax liabilities of Solair.
4.19.2. Solair has, or to the knowledge of the Shareholder, the
Shareholder and its Subsidiaries (including Solair) have, within the time
prescribed by law paid all federal, state and local and foreign Taxes that are
due and payable as shown on the Tax Returns.
4.19.3. Solair has, and to the knowledge of the Shareholder,
Solair has, no liens with respect to Taxes upon any of its properties or assets
other than liens for Taxes not yet due and payable.
4.19.4. Solair does not have in effect, and to the knowledge of
the Shareholder, Solair does not have in effect, as of the date of this
Agreement, any waiver or extension of any statute of limitations with respect to
Taxes.
22
4.19.5. Solair does not have, or to the knowledge of the
Shareholder, Solair does not have, a federal, state, local or foreign audit or
other administrative proceeding or court proceeding presently pending or, to the
knowledge of Solair and the Shareholder, threatened with regard to any Tax
Returns for Solair.
4.19.6. Neither the Shareholder nor Solair is a party to any
agreement, whether formal or informal or established by custom or practice,
providing for the allocation or sharing of Taxes.
4.19.7. Solair has not been a member of an affiliated or
consolidated group (or similar state or local filing group) other than any group
in which the Shareholder is the common parent.
4.19.8. Solair is an includible corporation (within the meaning of
Section 1504 of the Code) on a federal consolidated Income Tax Return that
includes the Shareholder. Any reference in this Agreement to a Tax Return of
Solair includes a reference to a consolidated, combined or unitary or other
similar Tax Return filed by or with the Shareholder and which includes in whole
or in part the results of Solair. All consolidated, combined or unitary Tax
Returns including Solair also included the Shareholder.
4.19.9. Except for Banner Aerospace (U.K.) Limited, a corporation
organized under the laws of the United Kingdom, Solair does not own any
corporate subsidiaries.
4.19.10. A consolidated federal Income Tax Return for a
Pre-Closing Period including Solair as a member will be filed for the tax year
of its common parent ending on or after the Closing Date.
4.19.11. Solair does not own any interests in a limited liability
company, partnership, business trust or similar entity.
4.19.12. All Taxes of Solair (and any of its Subsidiaries) for
Pre-Closing Periods and Straddle Periods attributable to the period thereof on
or before the Closing Date have been fully and timely paid and adequate reserves
or accruals for Taxes (other than Income Taxes) as of the Closing Date, will be
provided in the Adjusted Closing Date Balance Sheet and Shareholder will pay, or
cause to be paid, all Income Taxes of Solair not yet due and payable for
pre-Closing periods and Straddle Periods.
4.19.13. After August 31, 1998, and on or before the Closing Date,
the liability of Solair for Taxes shall be incurred in the ordinary course of
business consistent with past practices.
4.19.14. Solair has not been subject to, and to the knowledge of
the Shareholder, Solair has not been subject to, a claim made by a Governmental
Authority in a jurisdiction where Solair does not file Tax Returns that Solair
is or may be subject to Taxes assessed by such jurisdiction.
4.19.15. Solair has not been subject to, and to the knowledge of
the Shareholder, Solair has not been subject to, a deficiency or proposed
adjustment for any amount of Taxes asserted or assessed by any Governmental
Authority against Solair which has not been settled or otherwise resolved or not
reflected in the Adjusted Closing Date Balance Sheet.
4.19.16. Solair does not file, nor is it required to file, a
consolidated, combined or unitary or other similar state Tax Return including
the Shareholder or any other person or entity and which includes, or will
include, in whole or in part the results of Solair for any period on or before
the Closing Date.
4.19.17. All transactions between Solair and its related parties
(as defined in Section 482 of the Code) have been, and will be on or before the
Closing Date, conducted on an arm's-length basis (within the meaning of Section
482 the Code).
23
4.19.18. Solair has not made, and will not make, an election or
file a consent under Section 341(f) of the Code (or any corresponding provision
of state, local or foreign law).
4.19.19. Solair will not be required (i) as a result of a change
in method of accounting for a taxable period beginning on or before the Closing
Date, to include any adjustments under Section 481(a) of the Code (or any
corresponding provision of state, local or foreign law) in taxable income for
any period after the Closing Date, or (ii) as a result of any audit or
examination by any Governmental Authority for a taxable period beginning on or
before the Closing Date, whether set forth in a closing agreement under Section
7121 of the Code or other settlement agreement, to include any item of income or
exclude any item of deduction for any period after the Closing Date.
4.19.20. Solair has not made any payments, nor will it become
obligated (under any contract entered into on or before the Closing Date) to
make any payments, that will be non-deductible under Sections 162(m) or 280G of
the Code (or any corresponding provisions of state, local or foreign law).
4.19.21. Solair has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provisions of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code (or any corresponding
provision of state, local or foreign law).
4.19.22. True, correct and complete copies of (A) all income and
sales Tax Returns filed by or with respect to Solair for the years ended March
31, 1996 and 1997, and (B) any audit report issued within the last five years,
have been furnished or made available to Xxxxxxxxx, and all material tax
elections of Solair are clearly set forth on such Tax Returns.
4.19.23. Solair is not a party to a gain recognition agreement
under Section 367 of the Code and the regulations thereunder.
4.20. INSURANCE. Schedule 4.20 contains (i) a complete and correct
list of all insurance policies covering Solair and its properties, assets and
business (the "Insurance Policies") (copies of which have been provided to
Xxxxxxxxx) designating the insurance company, type of insurance, insured's name
and policy number and (ii) a detailed description of each pending claim under
any of the Insurance Policies for an amount in excess of $10,000 that relates to
loss or damage to the properties, assets or business of Solair. Such Insurance
Policies are in full force and effect, and all premiums due thereon have been
paid. As of the Closing Date, each of the Insurance Policies will be in force
and effect. Solair has complied with the provisions of such Insurance Policies.
Solair has not failed to give, in a timely manner, any notice required under any
of the Insurance Policies necessary to preserve its rights thereunder, and
neither Solair nor the Shareholder have any knowledge of any uninsured claims or
losses.
4.21. LICENSES AND PERMITS. Solair possesses all governmental or
official licenses, approvals, permits and authorizations necessary for the
operation of its business as presently conducted (collectively, the "Permits"),
and Schedule 4.21 contains a true and complete list of all such Permits. All
such Permits are valid and in full force and effect, and Solair is in compliance
with the respective requirements thereof, and no proceeding is pending or, to
the knowledge of Solair or the Shareholder, threatened to revoke or amend any of
them. None of the Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.22. ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. Subject to Section 4.15 hereof, the
Inventory and other Assets and the Leased Premises constitute, in the aggregate,
all of the assets and properties necessary for the conduct of the business of
Solair in the manner in which and to the extent to which such business is
currently being conducted. To the knowledge of Solair and the Shareholder, no
current supplier to Solair of items essential to the conduct of its business has
threatened to terminate
24
such current supplier's business relationship with Solair for any reason. Except
as set forth in Schedule 4.22, Solair does not have any direct or indirect
interest in any customer, supplier or competitor of Solair, or in any person
from whom or to whom Solair leases real or personal property. To the knowledge
of Solair and the Shareholder, except as set forth on Schedule 4.22, no
Affiliate of Solair or the Shareholder and no officer or director of Solair or
the Shareholder or any Familial Affiliate of any officer or director of Solair
or the Shareholder is a party to any Contract (other than a Contract for which
there is no continuing obligation of or benefit to Solair) or transaction with
Solair or has any interest in any property used by Solair.
4.23. INTELLECTUAL PROPERTY. Solair has full legal right, title and
interest in and to all trademarks, service marks, trade names, copyrights,
know-how, patents, trade secrets, owned proprietary computer software, data
bases and compilations, licenses (including licenses for the use of computer
software programs), and other intellectual property used by it in the conduct of
its business (the "Intellectual Property"). Neither the business of Solair as
presently conducted, nor the unrestricted use and exploitation of the
Intellectual Property by Solair, infringes or misappropriates any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property by Solair (except software license fees payable in the ordinary course
of business consistent with past practice). None of the Intellectual Property
owned by Solair has ever been declared invalid or unenforceable, or is the
subject of any pending or, to the knowledge of Solair or the Shareholder,
threatened action for opposition, cancellation, declaration, infringement, or
invalidity, unenforceability or misappropriation or like claim, action or
proceeding.
4.24. CONTRACTS. Schedule 4.24 sets forth a list of each Contract to
which Solair is a party or by which it or its properties and assets are bound
that provide for aggregate payments of more than One Hundred Fifty Thousand
Dollars ($150,000) or have a duration of more than six months) (the "Designated
Contracts"). In the case of those Designated Contracts which are denoted with
footnote 1 on Schedule 4.24, Solair has provided Xxxxxxxxx with copies which
have not been fully executed by all of the parties thereto; provided, however,
that Solair and the Shareholder represent and warrant to Xxxxxxxxx that each
such copy conforms to the copy that has been fully executed by the parties
thereto. In the case of those Designated Contracts which are denoted with
footnote 2 on Schedule 4.24, Solair shall provide Xxxxxxxxx with copies of such
Designated Contracts (or if not available, a summary of the terms thereof)
within thirty (30) days following the date hereof, and Solair and the
Shareholder represent and warrant that no such Designated Contract is likely to
have a material adverse effect on Solair and no consent is required thereunder
in connection with the transactions contemplated by this Agreement. In the case
of those Designated Contracts which are denoted with footnote 3 on Schedule
4.24, each such Designated Contract has expired in accordance with its terms,
but the parties thereto nevertheless continue to operate under the terms of such
Designated Contract as if such agreement remained in effect. True and correct
copies of each written Designated Contract (other than those denoted with
footnote 2 on Schedule 4.24) have been provided to Xxxxxxxxx and true and
correct summaries of each oral Designated Contract are set forth on Schedule
4.24. The copy of each written Designated Contract and the summary of each oral
Designated Contract furnished to Xxxxxxxxx is a true and complete copy or
summary, as the case may be, of the document it purports to represent and
reflects all amendments thereto. Schedule 4.6 identifies Designated Contracts
that require the consents of third parties to the transactions contemplated
hereby. Except as set forth in Schedule 4.24, Solair has complied with all of
the covenants to be performed by it under, and is not in violation of, the
Designated Contracts, and to the knowledge of Solair and the Shareholder, each
of the other parties to the Designated Contracts has complied with all of the
covenants to be performed by it under, and is not in violation of, any
Designated Contracts. Except as set forth in Schedule 4.24, no party to any
Designated Contract has made a claim for breach of, or indemnification under, or
has delivered a notice of termination or default under, any Designated Contract.
Except as set forth in Schedule 4.24, no event has occurred which constitutes,
or after notice or the passage of time, or both, would constitute, a default by
Solair under any Designated Contract, and, to the knowledge of Solair and the
Shareholder, no such event has occurred which constitutes or would constitute a
default by any other party. Except as and to the extent expressly set forth in
any Designated Contract, Solair is not subject to any liability or payment
resulting from renegotiation of amounts paid to it or required to be paid to it
under any Designated Contract. As used in this Section, Contracts shall include,
without limitation, formal or informal, written or oral, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or
25
obligations to any other Person, or letters of intent or commitment letters with
respect to the same; (b) contracts obligating Solair to provide products or
services, excluding standard maintenance contracts entered into in the ordinary
course of business without material modification from the preprinted forms used
by Solair in the ordinary course of business; (c) leases of real property, (d)
leases of personal property (including, without limitation, leases of Inventory
or assets of the type included in Inventory); (e) distribution, sales agency or
franchise or similar agreements, or agreements providing for an independent
contractor's services, or letters of intent with respect to the same; (f)
employment agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements, any other agreements
relating to Solair or any employee, officer or director of Solair, and all
employee handbooks, policy statements and similar plans; (g) licenses,
assignments or transfers of trademarks, trade names, service marks, patents,
copyrights, trade secrets or know how, or other agreements regarding proprietary
rights or intellectual property; (h) any Contract relating to pending capital
expenditures by Solair; (i) contracts obligating Solair to purchase any products
or services, including without limitation, vehicles, parts, accessories,
supplies, equipment, oil, advertising, media and media related services of any
kind; and (j) all other Contracts or understandings which are material to Solair
or its business, assets or properties, irrespective of subject matter and
whether or not in writing, and not otherwise disclosed on the Schedules.
4.25. ACCURACY OF INFORMATION FURNISHED BY SOLAIR OR THE SHAREHOLDER. No
written representation, warranty or statement made by Solair or the Shareholder
in this Agreement or the Tax Agreement (including the various Exhibits and
Schedules attached hereto and thereto) or any certificate delivered pursuant
hereto, contains or shall contain any untrue statement of a material fact or
omits or shall omit any material fact necessary to make the information
contained therein not misleading. Solair and the Shareholder have provided
Xxxxxxxxx with true, accurate and complete copies of all documents requested by
Xxxxxxxxx which are listed or described in the various Schedules attached
hereto.
4.26. BANK ACCOUNTS. Schedule 4.26 sets forth all accounts of Solair
with any bank, broker or other depository institution, and the names of all
persons authorized to withdraw funds from each such account.
4.27. NO COMMISSIONS. Neither Solair nor the Shareholder has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
4.28. INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. The Shareholder is or will be acquiring the Warrant and the Xxxxxxxxx
Common Stock issuable upon exercise thereof for its own account for investment
and not with a view to, or for the sale in connection with, any distribution of
any of the Warrant and the Xxxxxxxxx Common Stock, except in compliance with
applicable state and federal securities laws. The Shareholder has had the
opportunity to discuss the transactions contemplated hereby with Xxxxxxxxx and
has had the opportunity to obtain such information pertaining to Xxxxxxxxx as
has been requested, including but not limited to filings made by Xxxxxxxxx with
the SEC under the Exchange Act, including the most recent filing by Xxxxxxxxx on
Form 10-K, and any filings on Schedule 14A and Forms 10-Q or 8-K since the end
of Xxxxxxxxx'x last fiscal year end, which filings are also available on the
Internet at xxx.xxx.xxx. The Shareholder is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, and has such
knowledge and experience in business or financial matters that it is capable of
evaluating the merits and risks of an investment in the Warrant and the
Xxxxxxxxx Common Stock.
26
ARTICLE 5.
CONDUCT OF BUSINESS PENDING THE ACQUISITION
5.1. CONDUCT OF BUSINESS BY SOLAIR PENDING THE ACQUISITION. Solair
covenants and agrees that, between the date of this Agreement and the Closing
Date, the business of Solair shall be conducted only in, and Solair shall not
take any action except in, the ordinary course of business, consistent with past
practice. Solair shall use commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its current
officers, employees and consultants, to preserve its present relationships with
customers, suppliers and other persons with which it has significant business
relations. By way of amplification and not limitation, Solair shall not, between
the date of this Agreement and the Closing Date, directly or indirectly, do or
propose or agree to do any of the following without the prior written consent of
Xxxxxxxxx:
5.1.1. amend or otherwise change its Articles of Incorporation or
Bylaws or equivalent organizational documents;
5.1.2. issue, sell, pledge, dispose of, encumber or lease, or
authorize the issuance, sale, pledge, disposition or lease of, or grant of an
encumbrance on, (i) any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of such capital stock, or any other ownership interest, of it, or
(ii) any of its assets, tangible or intangible, except in the ordinary course of
business consistent with past practice and in transactions not exceeding Five
Hundred Thousand Dollars ($500,000) in the aggregate.
5.1.3. declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
5.1.4. reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
5.1.5. except as expressly permitted pursuant to Section 6.21
hereof with respect to the sale of all of the Designated Costed Inventory, or as
expressly permitted pursuant to Section 6.23 hereof with respect to the
Permitted Sempati Transaction, or as set forth on Schedule 5.1, (i) acquire
(including, without limitation, for cash or shares of stock, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof, or
make any investment either by purchase of stock or securities, contributions of
capital or property transfer, or, except in the ordinary course of business,
consistent with past practice and in transactions not exceeding Five Hundred
Thousand Dollars ($500,000) in the aggregate, purchase any property or assets of
any other Person, (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, other than loans to employees not exceeding Three Thousand Dollars
($3,000) individually or Fifteen Thousand Dollars ($15,000) in the aggregate,
(iii) to the extent not prohibited by any other provision of this Section 5.1,
enter into any Contract other than in the ordinary course of business,
consistent with past practice and providing for payments not exceeding One
Hundred Thousand Dollars ($100,000) in the aggregate over the term of such
Contract (except for Contracts relating to the purchase of inventory, which
Contracts are subject to the limitations set forth in subsection (iv) below),
(iv) make capital expenditures exceeding One Hundred Thousand Dollars
($100,000), or purchases of inventories exceeding Five Hundred Thousand Dollars
($500,000), in each case, in the aggregate, (v) enter into any transaction with
an Affiliate or Familial Affiliate of Solair other than a transaction (a) in the
ordinary course of business consistent with past practice, (b) on terms no less
favorable to Solair than the terms on which Solair would undertake a similar
transaction with an unaffiliated third party, (c) providing for payments of less
than Twenty Five Thousand Dollars ($25,000), and (d) providing for payments
which, when aggregated with the payments payable on account of all other
transactions with Affiliates or Familial Affiliates of Solair, in an aggregate
amount less than Two Hundred Thousand Dollars ($200,000) or (vi) write-up the
value of any Inventory on its books and records.
27
5.1.6. except as set forth on Schedule 5.1, increase the
compensation payable or to become payable to its officers or, other than in the
ordinary course of business consistent with past practice, its other employees,
or, except as presently bound to do, grant any severance or termination pay to,
or enter into any employment or severance agreement with, any of its directors,
officers or other employees, or establish, adopt, enter into or amend or take
any action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing, trust, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
5.1.7. take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
5.1.8. pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;
5.1.9. increase or decrease prices charged to its customers,
except for previously announced price changes or price changes made in the
ordinary course of business, consistent with past practice, or take any other
action which might reasonably be expected to result in any material increase in
the loss of customers through non-renewal or termination of contracts or other
causes; or
5.1.10. agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty in Article IV untrue or incorrect.
ARTICLE 6.
ADDITIONAL AGREEMENTS
6.1. FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
6.2. COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement,
and to use their respective commercially reasonable efforts to agree jointly on
a method to overcome any objections by any Governmental Authority to any such
transactions.
6.3. HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall (i)
make promptly (and in no event later than five (5) business days following the
execution of this Agreement) its respective filings, if any, and thereafter make
any other required submissions, under the HSR Act, with respect to the
transactions contemplated hereby, and shall seek early termination of the
applicable waiting period under the HSR Act, (ii) take all appropriate actions,
and do, or cause to be done, all things necessary, proper or advisable under any
applicable laws, regulations and Contracts to consummate and make effective the
transactions contemplated herein, including, without limitation, obtaining all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of any Governmental Authority and parties to Contracts with Solair as are
necessary for the consummation of the transactions contemplated hereby, (iii)
make on a prompt and timely basis all governmental or regulatory notifications
and filings required to be made by it to consummate and make effective the
transactions contemplated
28
hereby, and (iv) defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby and take
all actions necessary or advisable to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby.
6.4. MUTUAL COOPERATION. Subject to the Confidentiality Agreement, from
the date hereof to the Closing Date, Solair shall (and shall cause its
directors, officers, employees, auditors, counsel and agents to) afford
Xxxxxxxxx and Xxxxxxxxx'x officers, employees, auditors, counsel and agents
reasonable access on reasonable notice during normal business hours to its
properties, offices and other facilities, to its officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be reasonably requested. Neither
the due diligence investigation made by Xxxxxxxxx in connection with the
Acquisition nor the information provided to or obtained by Xxxxxxxxx shall
affect any representation or warranty contained in this Agreement.
6.5. NOTIFICATION OF CERTAIN MATTERS. Solair and the Shareholder shall
give prompt notice to Xxxxxxxxx of the occurrence or non-occurrence of any event
of which either Solair or the Shareholder has knowledge which would likely cause
any representation or warranty contained herein made by either of them to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
applicable to it not to be complied with or satisfied. Xxxxxxxxx shall give
prompt notice to Solair and the Shareholder of the occurrence or non-occurrence
of any event of which Xxxxxxxxx has knowledge which would likely cause any
representation or warranty contained herein made by Xxxxxxxxx to be untrue or
inaccurate, or any covenant, condition, or agreement contained herein applicable
to it not to be complied with or satisfied.
6.6. RESTRICTIVE COVENANTS. In order to assure that Xxxxxxxxx will
realize the benefits of the Acquisition, the Shareholder agrees with Xxxxxxxxx
as follows:
6.6.1. During the period commencing on the Closing Date and ending
42 months thereafter, (the "Restriction Period"), neither the Shareholder nor
any Person in which the Shareholder has a Controlling Interest (collectively,
the "Restricted Parties") shall, directly or indirectly, employ or solicit for
employment any person who was, at any time within the immediately preceding six
(6) months, employed by Solair. The parties agree that nothing herein is
intended to prohibit the Shareholder from advertising generally for any job
position (provided that the Shareholder does not hire any person responding
thereto that was employed by Solair at any time within the immediately preceding
six (6) month period).
6.6.2. During the Restriction Period, no Restricted Party shall,
directly or indirectly, engage in the business of purchasing, selling and
supporting aircraft parts, as conducted by Solair on the Closing Date (the
"Competitive Business"), provided that the foregoing restriction shall not apply
to any of the following:
6.6.2.1. Any Restricted Party that was engaged in the
Competitive Business prior to the date of this Agreement (a list of such
Restricted Parties is set forth in Schedule 6.6 hereof) may continue to
engage in the Competitive Business, and may reasonably develop and expand
such Competitive Business.
6.6.2.2. Any Restricted Party may acquire and hold, in the
aggregate, up to 10% of the issued and outstanding capital stock or other
equity interest in any Person that engages in the Competitive Business.
6.6.2.3. Any Restricted Party may acquire any Person or
business that engages in the Competitive Business, provided that (1) such
Competitive Business does not constitute the principal business of the
acquired Person or
29
business (based on the sales of the acquired Person or business during
the preceding four (4) full calendar quarters), and (2) if the
Competitive Business constitutes more than fifteen percent (15%) of the
revenues of the acquired Person or business, the Restricted Party uses
reasonable efforts to divest that portion of the acquired Person or
business that engages in the Competitive Business within twelve (12)
months after the acquisition thereof.
6.6.3. At any time following the Closing Date no Restricted Party
shall, directly or indirectly, in any way utilize, disclose, copy, reproduce or
retain in its possession any of the proprietary rights or records of Solair or
any subsidiary of Solair, including, but not limited to, any of their respective
customer lists.
The Shareholder agrees and acknowledges that the restrictions contained
in this Section are reasonable in scope and duration and are necessary to
protect Xxxxxxxxx and its Affiliates after the Closing Date. If any provision of
this Section 6.6 as applied to any party or to any circumstance is adjudged by a
court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section 6.6
will cause irreparable damage to Xxxxxxxxx and its Affiliates and upon breach of
any provision of this Section 6.6, Xxxxxxxxx and its Affiliates shall be
entitled to injunctive relief, specific performance or other equitable relief;
provided, however, that, this shall in no way limit any other remedies which
Xxxxxxxxx and its Affiliates may have (including, without limitation, the right
to seek monetary damages). Xxxxxxxxx and the Shareholder hereby agree that
Xxxxxxxxx may assign, without limitation, the foregoing restrictive covenants to
any successor to or Affiliates of Xxxxxxxxx.
6.7. CONFIDENTIALITY; PUBLICITY. The parties hereby ratify and affirm
their obligations under the Confidentiality Agreement. Except as may be required
by law or as otherwise permitted or expressly contemplated herein, no party
hereto or their respective Affiliates, employees, agents and representatives
shall disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Xxxxxxxxx and the Shareholder may
each make such public disclosure which it believes in good faith to be required
by law or by the terms of any listing agreement with or requirements of a
securities exchange upon which its securities may be listed or traded; provided,
however, that each of them shall make commercially reasonable efforts to
coordinate with the other in making such public disclosure.
6.8. NO OTHER DISCUSSIONS. From the date hereof until the earlier of
the Closing Date or the date that this Agreement shall terminate in accordance
with its terms, none of Solair, the Shareholder or any of their respective
employees, agents and representatives shall (a) solicit, encourage, consider or
accept any offer from any Person to acquire all or any portion of the assets of
or any interest in Solair, (b) participate in any negotiations or discussions
with any other Person concerning the sale of all or any portion of the assets of
or any interest in Solair, (c) provide any non-public information about Solair
(other than to Xxxxxxxxx and its agents and consultants as provided herein), (d)
enter into any agreement or commitment (whether or not binding) with respect to
any of the foregoing, or (e) otherwise cooperate in any way with, or assist,
facilitate or encourage any effort by any other
30
person seeking to acquire all or any portion of the assets of or any interest in
Solair. Solair and the Shareholder shall immediately notify Xxxxxxxxx in writing
of any such inquiry or proposal which any of Solair, the Shareholder or any of
their respective employees, agents or representatives may receive with respect
to the foregoing transactions, and unless any such person shall be bound by a
duty of confidentiality with respect to such offer or inquiry, setting forth the
terms and identity of the inquiror or offeror.
6.9. TRADING IN COMMON STOCK OF XXXXXXXXX OR THE SHAREHOLDER. Except as
otherwise expressly consented to by Xxxxxxxxx in writing, from the date of this
Agreement until the Closing Date, neither Solair nor the Shareholder will
directly or indirectly purchase or sell (including short sales) any shares of
common stock of Xxxxxxxxx or securities derivative therefrom in any transactions
effected on the Nasdaq Stock Market or otherwise. Except as otherwise expressly
consented to by the Shareholder in writing, from the date of this Agreement
until the Closing Date, Xxxxxxxxx will not directly or indirectly purchase or
sell (including short sales) any shares of common stock of the Shareholder or
securities derivative therefrom in any transactions effected on the New York
Stock Exchange or otherwise.
6.10. SHAREHOLDER VOTE. The Shareholder, in executing this Agreement,
consents as the sole shareholder of Solair to the Acquisition and the
transactions contemplated hereby, and waives notice of any meeting in connection
therewith, and hereby releases and waives all rights with respect to the
Acquisition and the transactions contemplated hereby under the Articles of
Incorporation and/or Bylaws of Solair, applicable state law, and any agreements
relating to the sale, purchase or voting of any capital stock of the Solair. At
Closing, the Shareholder and Solair agree that any and all agreements relating
to the sale, purchase or voting of capital stock of Solair, shall be, and hereby
are, terminated.
6.11. DELIVERY OF SHARES. At the Closing, the Shareholder shall deliver
to Xxxxxxxxx certificates evidencing all the Shares duly endorsed for transfer
to Xxxxxxxxx.
6.12. RESIGNATIONS. At Closing, the Shareholder shall deliver to
Xxxxxxxxx the resignations of all of the directors of Solair and Banner
Aerospace (U.K.) Limited, and those officers of Solair and Banner Aerospace
(U.K.) Limited set forth on Schedule 6.12 from such positions, effective on the
Closing Date.
6.13. ESCROW AGREEMENT AND TAX AGREEMENT. Prior to or at the Closing,
(a) Xxxxxxxxx, the Shareholder and the Escrow Agent shall enter into the Escrow
Agreement, and (b) the Shareholder and Xxxxxxxxx shall enter into the Tax
Agreement.
6.14. RECEIVABLES. Solair shall, following the Closing Date, use
commercially reasonable efforts, consistent with past practice, to collect any
Receivables which arose on or prior to the Closing Date. Any payments received
by Solair from a customer following the Closing Date shall be applied to the
unpaid invoices issued to such customer in the order in which such invoices were
issued, provided, however, that, if Solair shall have received written notice
from a customer disputing all or any portion of an unpaid invoice (a copy of
which notice shall be provided to the Shareholder), then any payment thereafter
received from such customer shall not be applied to the disputed portion of such
invoice, but shall be applied to the balance of such invoice, and then to the
next invoice issued to such customer (in each case, until the dispute with such
customer shall be resolved). At any time upon the written request of the
Shareholder, and upon payment therefor as provided below, Solair shall sell to
the Shareholder any Receivables which arose on or prior to the Closing Date and
which remain unpaid, whether in cash or by setoff against another obligation
owed by Solair to the obligor of such Receivable, or otherwise unsatisfied, as
of the three (3) month anniversary of the Closing Date. At any time upon the
written request of Xxxxxxxxx, the Shareholder shall purchase from Solair all
Receivables which arose on or prior to the Closing Date and which remain unpaid,
whether in cash or by setoff against another obligation owed by Solair to the
obligor of such Receivable, or otherwise unsatisfied, as of the one (1) year
anniversary of the Closing Date. The purchase price of any Receivables purchased
by the Shareholder hereunder shall be equal to the face amount thereof, and upon
any such purchase, the Shareholder may retain the proceeds of such Receivables
as and when collected (and to the extent thereafter collected by or paid to
Xxxxxxxxx, Xxxxxxxxx shall promptly remit the same to the Shareholder). If
31
Xxxxxxxxx elects to have Solair sell Receivables to the Shareholder, Xxxxxxxxx
shall deliver to the Shareholder, no later than thirty (30) days following the
one (1) year anniversary of the Closing Date, a certificate signed by its Chief
Financial Officer setting forth the aggregate of such Receivables which remain
unpaid or unsatisfied as of such date, together with all related and supporting
documentation, and the Shareholder shall purchase such Receivables from Solair
within thirty (30) days following receipt thereof. If the Shareholder shall fail
to pay such amount within such thirty (30) day period, the Xxxxxxxxx shall have
the right (but not the obligation), in addition to any other remedies which it
may have, to deem such amount to be Xxxxxxxxx Indemnifiable Damages in
accordance with Article IX (provided that the Xxxxxxxxx Indemnification
Threshold shall not be applicable to such amount and such amount shall not count
against the Xxxxxxxxx Indemnification Cap). The Shareholder shall, on or prior
to the one (1) year anniversary of the Closing Date, use only commercially
reasonable methods, consistent with the past practice of Solair, to collect any
Receivables purchased by it under this Section. Xxxxxxxxx shall, for the one (1)
year period following the Closing Date, provide the Shareholder with a report,
and any other supporting documentation reasonably requested by the Shareholder,
on a monthly basis, setting forth the then current status of the Receivables
which arose on or prior the Closing Date.
6.15. ASSUMPTION OF LITIGATION. The Shareholder shall assume the defense
of and any and all liabilities arising out of or related to any action, suit or
other legal or administrative proceeding pending against Solair or any of it
properties or assets and of which Solair or the Shareholder have knowledge as of
the Closing Date (including without limitation, any matters disclosed in
Schedule 6.15) (collectively, the "Assumed Litigation"). For purposes of this
Section, Solair and the Shareholder shall be deemed to have knowledge of any
action, suit or proceeding, service of process of which shall have been made
upon Solair or the Shareholder (or their respective registered agents) prior to
the Closing. Notwithstanding the foregoing (i) the Shareholder shall have no
right to consent to the entry of a judgment or enter into any settlement or
compromise in connection with any Assumed Litigation to the extent the consent,
settlement or compromise provides for any injunctive or other equitable relief
against Solair, or otherwise provides for any continuing obligations of any
nature against Solair or loss of rights of Solair (other than the rights of
Solair to any benefits that may accrue or arise from Assumed Litigation), unless
Xxxxxxxxx consents thereto in writing, and (ii) Xxxxxxxxx shall have the right
to select separate counsel to participate in the defense of any Assumed
Litigation on its behalf, at its sole cost and expense. Solair shall cooperate
with the Shareholder in connection with the defense of the Assumed Litigation as
may reasonably be requested by the Shareholder (and the Shareholder shall
reimburse Xxxxxxxxx, Xxxxxx and their respective officers, directors and
employees for any out-of-pocket costs and expenses incurred by them in providing
such cooperation), provided that such cooperation shall not disrupt the conduct
of Xxxxxxxxx'x or Solair's day-to-day business and operations. The Shareholder
shall be entitled to any benefits that may accrue or arise from the Assumed
Litigation. Solair shall, if requested by the Shareholder, sign a limited
release agreement confirming its release, subject to the terms and conditions of
this Agreement, of any rights in or to the claims made in the Assumed
Litigation.
6.16. ASSUMPTION OF GUARANTEES. Xxxxxxxxx shall either (i) at Closing
assume the guarantees previously made by the Shareholder on behalf of Solair and
identified on Schedule 6.16 to the extent that any guaranteed parties thereunder
consent to the substitution of Xxxxxxxxx thereunder or (ii) indemnify and hold
harmless the Shareholder on account of any guarantees previously made by the
Shareholder on behalf of Solair and identified on Schedule 6.16 with respect to
obligations of Solair arising after the Closing, to the extent that any
guaranteed parties thereunder do not consent to the substitution of Xxxxxxxxx
thereunder. If Xxxxxxxxx shall fail to pay any amount due under subsection (ii)
of the foregoing sentence and the Shareholder shall pay such amount, then the
Shareholder shall have the right (but not the obligation), in addition to any
other remedies which it may have, to deem such amount to be Shareholder
Indemnifiable Damages in accordance with Article IX (provided that the
Shareholder Indemnification Threshold shall not be applicable to such amount and
such amount shall not count against the Shareholder Indemnification Cap).
6.17. CONTRIBUTION OF ASSETS OF BANNER SINGAPORE. Prior to the Closing,
the Shareholder shall contribute to Solair (or, at Xxxxxxxxx'x option, to a
special purpose subsidiary of Solair) all of the assets and liabilities relating
to the business of Solair (a true and accurate list of which is set forth on
Schedule 6.17) of Banner Aerospace-Singapore, Inc., free and clear of any Liens
or other restrictions.
32
6.18. CHANGE OF NAME. Promptly after the Closing Date, Xxxxxxxxx shall
take all actions necessary to change the name of Banner Aerospace (U.K.) Limited
to remove any reference to the Shareholder and the "Banner" name.
6.19. EMPLOYMENT CONTRACTS. Xxxxxxxxx acknowledges and agrees that, from
and after the Closing Date, Solair and Xxxxxxxxx shall be solely liable for all
obligations arising after the Closing Date, and shall be responsible for the
payment of any severance payments that may be required to be paid, in each case,
under the express terms of the Employment Contracts set forth in Schedule 6.19
(the "Designated Employment Contracts") hereof or the recision or modification
of offers to enter into any of the Employment Contracts which recision or
modification is undertaken (a) prior to the Closing Date by Solair with the
express prior written consent of Xxxxxxxxx, or (b) following the Closing Date.
6.20. TAXES.
6.20.1. Shareholder will prepare and file, or cause to be prepared
and filed, Income Tax Returns of Solair with respect to any Pre-Closing Period.
In order to assist the Shareholder in the preparation of all Income Tax Returns
that the Shareholder is required to prepare, Xxxxxxxxx will prepare (or cause
Solair to prepare in accordance with prior practices) and deliver to the
Shareholder, as soon as reasonably practical after their receipt of a request
therefore from the Shareholder, all data (including but not limited to the
annual tax reporting package) regarding Solair, reasonably requested by the
Shareholder, that is necessary to prepare any Income Tax Returns and properly
report the operations of Solair thereon.
6.20.2. Solair will prepare and file, or cause to be prepared and
filed, all Tax Returns (other than Income Tax Returns) due on or before the
Closing Date and all Tax Returns due after the Closing Date for Straddle
Periods.
6.20.3. Xxxxxxxxx will prepare and file, or cause to be prepared
and filed, all Tax Returns of Solair with respect to any Post-Closing Period.
6.20.4. In accordance with Treas. Reg. Section 1.1502-76(b), the
income of Solair through the Closing Date shall be included on a federal
consolidated Income Tax Return including Shareholder. Without the consent of
Xxxxxxxxx, a ratable allocation election described in Treas. Reg. Section
1.1502-76(b)(2)(ii)(B) may not be made with respect to such Return. No party
shall make an election with respect to Taxes on any Tax Return to be prepared
and filed by a party in accordance with this Section 6.20, without the consent
of the other party, if the making of such election would, or could, have an
adverse effect on the other party.
6.20.5. On the Closing Date, all Tax sharing agreements and
arrangements including (i) Solair on the one hand and (ii) the Shareholder, or
any of the Shareholder's subsidiaries (other than Solair), on the other hand,
including, without limitation (x) that certain Twelfth Amended and Restated Tax
Allocation Agreement dated June 10, 1998 among The Xxxxxxxxx Corporation, the
Shareholder, Solair and other subsidiaries of The Xxxxxxxxx Corporation, (y)
that certain Tax Allocation Agreement dated January 22, 1992, to which Solair is
a party, and (z) that certain Tax Indemnity Agreement dated July 11, 1990 to
which Solair is a party shall each be terminated or amended to remove Solair as
a party thereto and unconditionally and irrevocably release Solair from any
obligation whatsoever thereunder and shall have no further effect on Solair for
any taxable year or period (whether a past, present or future year or period),
and no additional payments shall be made thereunder by Solair on or after the
Closing Date in respect of a redetermination of Tax liabilities or otherwise.
6.20.6. Shareholder and Xxxxxxxxx shall (i) each provide the other
with such assistance as may reasonably be requested by either of them in
connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority or any judicial or administrative
proceeding with respect to Taxes, (ii) each retain and provide to the other any
records or other information which may be relevant to such return, audit
examination or proceeding, and (iii) each provide to the other any final
determination of any such audit or
33
examination, proceeding or determination that affects any amount required to be
shown on any Tax return of the other for any period (which shall be maintained
confidentially). Without limiting the generality of the foregoing, Xxxxxxxxx and
the Shareholder shall retain, until the applicable statutes of limitations
(including all extensions) have expired, copies of all Tax Returns, supporting
work papers, and other books and records or information of Solair which may be
relevant to such returns for all Tax periods or portions thereof ending before
or including the Closing Date, and shall not destroy or dispose of such records
or information without first providing the other party with a reasonable
opportunity to review and copy the same.
6.20.7. The Shareholder will pay, or cause to be paid, all Taxes
of Solair for Pre-Closing Periods, including all Income Taxes. Xxxxxxxxx will
pay, or will cause to be paid, all Taxes of Solair for Post-Closing Periods,
including Income Taxes. The Shareholder will pay, or cause to be paid, all Taxes
of Solair for any Straddle Period attributable to periods on or before the
Closing Date and which are not reflected as liabilities on the Adjusted Closing
Date Balance Sheet as of the Closing Date in calculating the Purchase Price.
Xxxxxxxxx will pay, or cause to be paid, all Taxes of Solair for any Straddle
Period attributable to periods after the Closing Date.
6.20.8. The Shareholder and Xxxxxxxxx will pay, on an equal basis,
for all sales, use, transfer, stamps, conveyance, value added or similar
transfer Tax imposed on the Shareholder by any Governmental Authority with
respect to the transfer of the Shares. If either party pays one hundred percent
(100%) of such a transfer Tax, the other party shall reimburse the first party
fifty percent (50%) of such Tax.
6.20.9. Shareholder and Xxxxxxxxx acknowledge that no election
under Code Section 338(h)(10) shall be made with respect to Solair.
6.20.10. No later than 10 days prior to the due date for filing,
Xxxxxxxxx shall provide to Shareholder copies of Tax Returns to be filed by
Solair for a Straddle Period and shall provide Shareholder the opportunity to
comment on such Tax Returns.
6.20.11. Xxxxxxxxx shall cause Banner Aerospace (U.K.) Limited not
to make any distribution of property during the period beginning on the Closing
Date and ending March 31, 1999 that would result in a diminution of the earnings
and profits of such entity for Federal income tax purposes.
6.20.12. Xxxxxxxxx shall pay all Tax resulting from any election
filed under Code Section 338 regarding Solair.
6.20.13. Solair or Shareholder shall between the date hereof and
the Closing Date pay all Federal, State, local and foreign Taxes of Solair when
and as the same are due and payable.
6.20.14. Solair will not have in effect as of the Closing Date any
waiver or extension of any statute of limitations with respect to Taxes.
6.20.15. Solair and the Shareholder shall, prior to the Closing,
deliver to Xxxxxxxxx true and complete copies of the consolidated Tax Return of
the Shareholder with respect to the period ending March 31, 1998 (the
"Shareholder Return").
6.20.16. References to Tax and Tax Return in Section 4.19 and this
Section 6.20 include a Tax or Tax Return of Banner Aerospace (U.K.) Limited or
any other subsidiary of Solair.
6.21. INVENTORY.
6.21.1. Notwithstanding anything to the contrary set forth herein,
Solair shall, in the ordinary course of business prior to the Closing Date,
offer for sale and may, at any time prior to the Closing Date, sell all of
34
the Designated Inventory, provided, however, that (i) the aggregate amount
received by Solair on account of the sale of the Designated Inventory shall not
be less than Ten Million Dollars ($10,000,000) minus any amount actually
received by Solair on account of the sale of Designated Inventory in the
ordinary course of business following the date hereof and on or prior to the
Closing Date, and (ii) Solair shall on the Closing Date have possession of any
and all consideration received by it from or on behalf of the Buyer of the
Designated Inventory. Xxxxxxxxx agrees to advise the Shareholder of the terms of
any sales of the Designated Inventory that occur within sixty (60) days of the
Closing Date.
6.21.2. Notwithstanding any representation or warranty made in
Section 4.15 with respect to Designated Costed Inventory (or any breach
thereof), in the event that the Actual Designated Costed Inventory Value as of
the Closing Date is less than the Book Designated Costed Inventory Value as of
the Closing Date, then sixty percent (60%) of the amount by which such shortfall
exceeds Ten Million Dollars ($10,000,000) shall be deemed Xxxxxxxxx
Indemnifiable Damages for purposes of Section 9.1 of this Agreement.
Notwithstanding the foregoing, in the event that Solair shall sell Designated
Costed Inventory in violation of Article V of this Agreement, the full amount of
any shortfall arising from such violation of Article V shall be deemed Xxxxxxxxx
Indemnifiable Damages.
6.21.3. Notwithstanding any representation or warranty made in
Section 4.15 with respect to Non-Designated Costed Inventory (or any breach
thereof), in the event that the Actual Non-Designated Costed Inventory Value as
of the Closing Date is less than the Book Non-Designated Costed Inventory Value
as of the Closing Date, then sixty percent (60%) of the amount by which such
shortfall exceeds One Million Nine Hundred Thirty Two Thousand Dollars
($1,932,000) shall be deemed Xxxxxxxxx Indemnifiable Damages for purposes of
Section 9.1 of this Agreement. Notwithstanding the foregoing, in the event that
Solair shall sell Non-Designated Costed Inventory in violation of Article V of
this Agreement, the full amount of any shortfall arising from such violation of
Article V shall be deemed Xxxxxxxxx Indemnifiable Damages.
6.21.4. Solair shall, prior to the Closing Date, write-down the
amount at which the Designated Inventory is carried on the books and records of
Solair by Twenty One Million Five Hundred Thousand Dollars ($21,500,000).
6.22. RELEASE FROM CREDIT AGREEMENT. Prior to or at the Closing, Solair
and the Shareholder shall deliver a release (the "Release") in the form attached
hereto as Exhibit E executed by or on behalf of each of the lenders under that
certain Second Amended and Restated Credit Agreement dated December 12, 1996, as
amended, to which Banner, Solair and other Affiliates of Banner are a party (the
"Credit Agreement"), fully and unconditionally releasing Solair and Banner
Aerospace (U.K.) Limited from any and all obligations, and waiving any claims
such lenders may have against such parties, arising under or in connection with
the Credit Agreement or any document related thereto.
6.23. SUBSTITUTION OF ESCROWED AMOUNT. Xxxxxxxxx shall, upon the
delivery to Xxxxxxxxx of the Xxxxxxxxx Guaranty, duly executed by The Xxxxxxxxx
Corporation, at any time prior to the eighteen (18) month anniversary of the
Closing Date, instruct the Escrow Agent to deliver to the Shareholder that
portion of the Escrowed Amount equal to Four Million Five Hundred Thousand
Dollars ($4,500,000) plus any interest which has accrued on the Escrowed Amount
minus any portion of the Escrowed Amount previously paid to any party hereto
under the terms of this Agreement and the Escrow Agreement.
6.24. THE SEMPATI TRANSACTION. Notwithstanding anything to the contrary
set forth herein, Solair may at any time prior to the Closing Date consummate
the Permitted Sempati Transaction.
6.25. SALE OF SEMPATI INVENTORY. Upon consummation of the Permitted
Sempati Transaction, Solair and the Shareholder shall agree on a procedure for
the sale of any Sempati Inventory during the period commencing on such date and
expiring on the thirty (30) month anniversary of such date (the "Sale Period").
The proceeds, if any, which are received by Solair on account of sales of the
Sempati Inventory during the Sale Period shall be split
35
between Solair and the Shareholder as follows: (1) in the case of the first One
Million Dollars ($1,000,000) paid to and received by Solair on account of sales
of any of the Sempati Inventory, Solair shall (a) grant the Shareholder a credit
on account of any such proceeds received on or prior to the one (1) year
anniversary of the Closing Date against any amounts required to be paid by the
Shareholder to Xxxxxxxxx under Section 6.14 of this Agreement, and (b) pay to
the Shareholder any such proceeds received following the one (1) year
anniversary of the Closing Date, and (2) in the case of any proceeds paid to and
received by Solair in excess of the first One Million Dollars ($1,000,000) on
account of sales of any of the Sempati Inventory, Solair shall pay to the
Shareholder fifty (50%) of such proceeds. The Shareholder shall have the right,
exercisable upon written notice to Xxxxxxxxx within sixty (60) days after the
end of the Sale Period, to purchase any Sempati Inventory that remains unsold at
the end of the Sale Period, for a purchase price of One Dollar ($1.00). If the
Shareholder exercises such right, it shall arrange for such inventory and any
related records which may be available to be removed from Solair's premises
within sixty (60) days after the end of the Sale Period, at the Shareholder's
sole cost and expense.
6.26. PAYMENT OF LEASE TERMINATION FEE. The Shareholder shall at Closing
pay to Xxxxxxxxx the sum of One Hundred Eighty Thousand Dollars ($180,000) (the
"Lease Termination Fee").
6.27. REMOVAL OF STORAGE DRUM. Solair shall, prior to Closing, cause
that certain 55 - gallon drum located at Solair's Ft. Lauderdale premises and
referenced in that certain letter dated November 20, 1998 from Environmental
Consulting & Technology, Inc. (a copy of which was provided to the Shareholder)
to be properly removed and disposed of in accordance with applicable
Environmental Laws, provided, however, that the failure of Solair to comply with
this Section may give rise to Xxxxxxxxx Indemnifiable Damages but shall not be a
basis for Xxxxxxxxx not to consummate the transactions contemplated under this
Agreement.
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX
The obligations of Xxxxxxxxx to effect the Acquisition shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions,
any or all of which may be waived in whole or in part in writing by Xxxxxxxxx:
7.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Solair and the Shareholder
contained in this Agreement shall be true and correct at and as of the Closing
Date in all material respects with the same force and effect as though made at
and as of that time except (i) for changes specifically permitted by or
disclosed on any schedule to this Agreement, and (ii) that those representations
and warranties which address matters only as of a particular date shall remain
true and correct as of such date; provided, however, that if any such
representation or warranty is already qualified by materiality, for purposes of
determining whether this condition has been satisfied, such representation or
warranty as so qualified shall be true and correct in all respects. Solair and
the Shareholder shall have performed and complied in all material respects with
all of their respective obligations required by this Agreement to be performed
or complied with at or prior to the Closing Date. Solair and the Shareholder
shall have delivered to Xxxxxxxxx a certificate, dated as of the Closing Date,
duly signed by an executive officer of each, certifying that such
representations and warranties are true and correct in all material respects and
that all such obligations have been complied with and performed in all material
respects.
7.2. NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to Solair, and (ii) none of the properties or assets of Solair shall have
been damaged by fire, flood, casualty, act of God or the public enemy or other
cause (regardless of insurance coverage for such damage), which damages may have
a Material Adverse Effect thereon, and there shall have been delivered to
Xxxxxxxxx a certificate to that effect, dated the Closing Date and duly signed
by an executive officer of Solair and the Shareholder.
36
7.3. CORPORATE CERTIFICATE. The Shareholder shall have delivered to
Xxxxxxxxx (i) copies of the Articles of Incorporation and Bylaws of each of
Solair and the Shareholder as in effect immediately prior to the Closing Date,
(ii) copies of resolutions adopted by the Board of Directors of each of Solair
and the Shareholder authorizing the transactions contemplated by this Agreement,
and (iii) a certificate of good standing for each of Solair and the Shareholder
issued by the Secretary of State of the state of its incorporation as of a date
not more than ten (10) business days prior to the Closing Date, certified in the
case of subsections (i) and (ii) of this Section as of the Closing Date by the
Secretary of Solair and the Shareholder, as applicable, as being true, correct
and complete.
7.4. CONSENTS. Solair and the Shareholder shall each have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any rights or obligations of Solair or the Shareholder from
any Person from whom such consent or waiver is required, under any Designated
Contract listed on Schedule 7.4 (the "Enumerated Designated Contracts") or under
the HSR Act which shall not have been revoked or modified, as of the Closing
Date, or who, as a result of the transactions contemplated hereby, would have
such rights to terminate or modify such Enumerated Designated Contracts, either
by the terms thereof or as a matter of law.
7.5. NO ADVERSE LITIGATION. (i) No party hereto shall be subject to any
order or injunction by an Governmental Authority restraining or prohibiting the
consummation of the transactions contemplated hereby, (ii) no action or
proceeding shall have been instituted by any Governmental Authority or any other
Person to restrain or prohibit, or to obtain damages from Solair or Xxxxxxxxx in
respect of, the consummation of the transactions contemplated hereby, which
action or proceeding shall remain pending as of the Closing Date unless resolved
to the reasonable satisfaction of Xxxxxxxxx (in its sole discretion), (iii) none
of the parties hereto shall have received written notice from any Governmental
Authority of (x) its intention to institute any action or proceeding to
restrain, enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry, including a routine civil investigative demand) into the consummation
of the transactions contemplated hereby or (y) the actual commencement of such
investigation and (iv) no law shall have been promulgated or enacted by any
Governmental Authority, which would prevent or make illegal the consummation of
the transactions contemplated hereby.
7.6. HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
7.7. UCC FILINGS. A search of the UCC records and searches of the FAA
Registry, in each case as of a date prior to the Closing Date, with respect to
Solair and its property and assets shall not have disclosed any active filings
other than filings with respect to the Liens identified on Schedule 4.15 hereto.
Xxxxxxxxx shall order searches of UCC records and of the FAA Registry no later
than two (2) business days following the date on which this Agreement is signed
by all parties and deliver copies of the results of such searches to the
Shareholder.
7.8. RESIGNATIONS. Solair and the Shareholder shall have delivered the
resignations referred to in Section 6.12 hereof.
7.9. DELIVERY OF SHARES AND RECORDS AND LEASE TERMINATION FEE. At the
Closing, the Shareholder shall have delivered to Xxxxxxxxx (i) the original
certificates evidencing the Shares, endorsed in blank and (ii) the original
corporate minute books and stock transfer ledgers of Solair and (iii) the Lease
Termination Fee.
7.10. DELIVERY OF ESCROW AGREEMENT AND TAX AGREEMENT. The Shareholder
and the Escrow Agent shall have executed and delivered to Xxxxxxxxx the Escrow
Agreement and the Shareholder shall have executed and delivered to Xxxxxxxxx the
Tax Agreement.
37
7.11. MINORITY INTEREST IN BANNER AEROSPACE (U.K.) LIMITED. Xxxxxx
Xxxxxxxxx shall have conveyed to Xxxxxxxxx or its designee, free and clear of
any Liens, and for the sum of One Dollar ($1.00), the shares of Banner Aerospace
(U.K.) Limited which represent the interest held by him in such company,
endorsed in blank.
7.12. CONTRIBUTION OF ASSETS OF BANNER SINGAPORE. The Shareholder shall
have contributed the assets and liabilities relating to the business of Solair
of Banner Aerospace - Singapore, Inc. to Solair (or if Xxxxxxxxx shall elect, to
a special purpose subsidiary of Solair).
7.13. RELEASE. Solair and the Shareholder shall have delivered to
Xxxxxxxxx the Release, executed by or on behalf of all of the lenders under the
Credit Agreement.
7.14. TAX RETURN. Solair and the Shareholder shall have delivered to
Xxxxxxxxx the Shareholder Return.
7.15. EVIDENCE OF TERMINATION OR AMENDMENT OF TAX SHARING AGREEMENTS.
Solair and the Shareholder shall have provided Xxxxxxxxx with evidence of
termination or amendment of the various agreements required to be terminated or
amended pursuant to and in accordance with Section 6.20(e) hereof as set forth
therein.
ARTICLE 8.
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDER
The obligation of the Shareholder to effect the Acquisition shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part in writing by
the Shareholder:
8.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Xxxxxxxxx contained in this
Agreement shall be true and correct at and as of the Closing Date in all
material respects with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed pursuant
to this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date; provided, however, that if any such representation or warranty is
already qualified by materiality, for purposes of determining whether this
condition has been satisfied, such representation or warranty as so qualified
shall be true and
38
correct in all respects. Xxxxxxxxx shall have performed and complied in all
material respects with all of its obligations required by this Agreement to be
performed or complied with by it at or prior to the Closing Date. Xxxxxxxxx
shall have delivered to the Shareholder a certificate, dated as of the Closing
Date, and signed by an executive officer, certifying that such representations
and warranties are true and correct in all material respects and that all such
obligations have been complied with and performed in all material respects.
8.2. PURCHASE PRICE. Xxxxxxxxx shall have made the Closing Date Payment
in respect of the Purchase Price, and shall have delivered to the Shareholder
the Warrant.
8.3. NO ORDER OR INJUNCTION. No court of competent jurisdiction or
other governmental body shall have issued or entered any order or injunction
restraining or prohibiting the transactions contemplated hereby, which remains
in effect at the time of Closing.
8.4. HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
8.5. DELIVERY OF ESCROW AGREEMENT AND TAX AGREEMENT. Xxxxxxxxx and the
Escrow Agent shall have executed and delivered to the Shareholder the Escrow
Agreement and Xxxxxxxxx shall have delivered the Escrowed Amount in accordance
therewith and Xxxxxxxxx shall have executed and delivered to the Shareholder the
Tax Agreement.
ARTICLE 9.
INDEMNIFICATION
9.1. AGREEMENT BY THE SHAREHOLDER TO INDEMNIFY. The Shareholder agrees
to indemnify and hold Xxxxxxxxx and its officers, directors, employees,
attorneys and Affiliates (each a "Xxxxxxxxx Indemnified Party" and collectively
the "Xxxxxxxxx Indemnified Parties") harmless from and against the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, reasonable counsel and paralegal fees and expenses) incurred
or suffered by any of the Xxxxxxxxx Indemnified Parties arising out of or
resulting from (i) any breach of a representation or warranty made by Solair or
the Shareholder in this Agreement or the Tax Agreement, (ii) any breach of a
covenant or agreement made by Solair or the Shareholder in or pursuant to this
Agreement or the Tax Agreement, (iii) any inaccuracy in any written statement
made by Solair or the Shareholder in any certificate delivered by Solair or the
Shareholder pursuant to this Agreement, (iv) any Tax liability of Solair or the
Shareholder arising from or relating to any Pre-Closing Tax Period or that
portion of the Straddle Period ending on the Closing Date, (v) any claims of any
third parties arising from or relating to any facts, circumstances or events
occurring on or prior to the Closing Date with respect to Solair or its
business, other than (a) those expressly described in this Agreement or the
Schedules hereto, (b) those set forth or reserved for on the Adjusted Closing
Date Balance Sheet, or (c) the Assumed Litigation (which is covered by
subsection (vi) below), (vi) the Assumed Litigation
39
(collectively, "Xxxxxxxxx Indemnifiable Damages"). Notwithstanding anything else
to the contrary set forth herein, the remedies for a breach of the
representations and warranties set forth in Section 4.15(a) in so far as they
relate to Costed Inventory shall be limited to the remedies set forth in
Sections 6.21(b) and (c) of this Agreement. Notwithstanding the foregoing
provisions, no claim for Xxxxxxxxx Indemnifiable Damages may be asserted by the
Xxxxxxxxx Indemnified Parties until the aggregate of all Xxxxxxxxx Indemnifiable
Damages exceeds Two Million Dollars ($2,000,000) (the "Xxxxxxxxx Indemnification
Threshold"), at which time the Xxxxxxxxx Indemnified Parties may assert claims
for the amount by which the Xxxxxxxxx Indemnifiable Damages exceeds the amount
of the Xxxxxxxxx Indemnification Threshold; provided, however, that the
Xxxxxxxxx Indemnification Threshold shall not apply to Xxxxxxxxx Indemnifiable
Damages with respect to or arising from (i) a breach of any one or more of the
representations and warranties set forth in Section 4.13(g) or the covenant of
Solair set forth in Section 6.27, (ii) a breach of any one or more of the
representations and warranties set forth in Section 4.19 or the covenants of the
Shareholder or Solair set forth in Section 6.20 with respect to Income Taxes,
and (iii) a breach of any representation, warranty or covenant made by the
Shareholder in the Tax Agreement or arising under subsection (iv) of this
Section 9.1 with respect to Income Taxes. Notwithstanding anything to the
contrary set forth herein, the total amount payable hereunder by the Shareholder
on account of Xxxxxxxxx Indemnifiable Damages may not exceed Ten Million Dollars
($10,000,000), except that (a) the total amount payable hereunder by the
Shareholder may exceed Ten Million Dollars ($10,000,000) but may not exceed
Thirty Five Million Dollars ($35,000,000) on account of Xxxxxxxxx Indemnifiable
Damages with respect to or arising from a breach of any one or more of the
representations and warranties set forth in the first or last sentence of
Section 4.1, or in Section 4.2, Section 4.3, Section 4.4, Section 4.5, Section
4.13, the second sentence of Section 4.15(a), or in Section 4.18, (b) the total
amount payable hereunder by the Shareholder may exceed Thirty Five Million
Dollars ($35,000,000) but may not exceed the amount of the Purchase Price (such
applicable amount being referred to herein as the "Xxxxxxxxx Indemnification
Cap") on account of Xxxxxxxxx Indemnifiable Damages with respect to or arising
from (i) a breach of any one or more of the representations and warranties set
forth in Section 4.19 or the covenants of the Shareholder or Solair set forth in
Section 6.20 with respect to Income Taxes, and (ii) a breach of any
representation, warranty or covenant made by the Shareholder in the Tax
Agreement or arising under subsection (iv) of this Section 9.1, and (c) the
Xxxxxxxxx Indemnification Cap and Xxxxxxxxx Indemnification Threshold shall not
apply to and there shall be no limitation or restriction whatsoever on the
liability of the Shareholder under this Article IX for Xxxxxxxxx Indemnifiable
Damages arising under subsection (vi) of this Section 9.1, and no Xxxxxxxxx
Indemnifiable Damages arising therefrom shall be included in determining whether
the Xxxxxxxxx Indemnification Cap has been met. Except as specifically provided
in subsections (b) and (c) of the preceding sentence, in no event shall the
total amount payable hereunder by the Shareholder on account of Xxxxxxxxx
Indemnifiable Damages exceed Thirty Five Million Dollars ($35,000,000).
9.2. AGREEMENT BY XXXXXXXXX TO INDEMNIFY. Xxxxxxxxx agrees to indemnify
and hold the Shareholder and its officers, directors, employees, attorneys and
Affiliates (each a "Shareholder Indemnified Party" and together the "Shareholder
Indemnified Parties") harmless from and against the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, reasonable counsel and paralegal fees and expenses) incurred or
suffered by any of the Shareholder Indemnified Parties arising out of or
resulting from (i) any breach of a representation or warranty made by Xxxxxxxxx
in this Agreement or the Tax Agreement, (ii) any breach of a covenant or
agreement made by Xxxxxxxxx in or pursuant to this Agreement or the Tax
Agreement, (iii) any inaccuracy in any statement made by Xxxxxxxxx in any
certificate, instrument or other document delivered by Xxxxxxxxx pursuant to or
in connection with this Agreement, (iv) any Tax liability of Solair or the
Shareholder arising from or relating to any Post-Closing Tax Period or that
portion of the Straddle Period beginning after the Closing Date, and (v) any
claims of any third parties arising from or relating to any facts, circumstances
or events occurring after the Closing Date with respect to Solair or its
business (collectively, "Shareholder Indemnifiable Damages"). Notwithstanding
the foregoing provisions, no claim for Shareholder Indemnifiable Damages shall
be asserted by the Shareholder Indemnified Parties until the aggregate of all
Shareholder Indemnifiable Damages exceeds Two Million Dollars ($2,000,000) (the
"Shareholder Indemnification Threshold"), at which time the Shareholder
Indemnified Parties may assert claims for the amount by which the Shareholder
Indemnifiable Damages exceeds the amount of the Shareholder Indemnification
Threshold, provided, however, that the Shareholder Indemnification Threshold
shall not apply to Shareholder Indemnifiable Damages relating to with respect to
or arising from (i) a breach of any one or more of the covenants of Xxxxxxxxx
set forth in Section 6.20
40
with respect to Income Taxes, (ii) a breach of any representation, warranty or
covenant made by Xxxxxxxxx in the Tax Agreement or arising under subsection (iv)
of this Section 9.2, or (iii) any claim brought under Section 6.19 hereof.
Notwithstanding anything to the contrary set forth herein, the total amount
payable hereunder by Xxxxxxxxx on account of Shareholder Indemnifiable Damages
may not exceed Ten Million Dollars ($10,000,000), except that (a) the total
amount payable hereunder by Xxxxxxxxx may exceed Ten Million Dollars
($10,000,000) but may not exceed Thirty Five Million Dollars ($35,000,000) on
account of Shareholder Indemnifiable Damages with respect to or arising from a
breach of any one or more of the representations and warranties set forth in
Section 3.1, Section 3.2, Section 3.3 or Section 3.4, and (b) the total amount
payable hereunder by Xxxxxxxxx may exceed Thirty Five Million Dollars
($35,000,000) but may not exceed the amount of the Purchase Price (such
applicable amount being referred to herein as the "Shareholder Indemnification
Cap") on account of Shareholder Indemnifiable Damages relating to Income Taxes
with respect to or arising under subsection (iv) of this Section 9.2. Except as
specifically provided in subsection (b) of the preceding sentence, in no event
shall the total amount payable hereunder by Xxxxxxxxx on account of Shareholder
Indemnifiable Damages exceed Thirty Five Million Dollars ($35,000,000).
9.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Shareholder or Xxxxxxxxx in this
Agreement or pursuant hereto shall survive the closing of the transactions
contemplated hereby for a period of eighteen (18) months following the Closing
Date; provided, however, that (i) the representations and warranties set forth
in Section 3.1, Section 3.2, Section 3.3, the first and last sentence of Section
4.1, or in Section 4.2, Section 4.3, Section 4.4, Section 4.5, and the second
sentence of Section 4.15(a) shall survive indefinitely, (ii) the representations
and warranties set forth in Section 4.19 shall expire thirty (30) days following
the time the latest applicable statute of limitations expires for the
enforcement by an applicable Governmental Authority or any other Person of any
remedy with respect to a violation of or the subject matter covered by such
representations and warranties, and (iii) the Shareholder's obligations to
indemnify the Xxxxxxxxx Indemnified Parties in connection with any claim brought
by the Shareholder, any officer of director of Solair, or any Affiliate of the
Shareholder shall apply to any such claim first asserted within the period
ending on the four (4) year anniversary of the Closing Date. No claim for the
recovery of any Xxxxxxxxx Indemnifiable Damages or Shareholder Indemnifiable
Damages with respect to the representations and warranties in this Agreement may
be asserted by any of the Xxxxxxxxx Indemnified Parties or by the Shareholder
after such representations and warranties shall expire in accordance with the
terms of this Agreement; provided, however, that claims for Xxxxxxxxx
Indemnifiable Damages or Shareholder Indemnifiable Damages first asserted within
the applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement. All covenants of the parties providing for actions to be
taken on or following the Closing Date shall survive indefinitely except as
otherwise expressly stated herein.
9.4. THIRD PARTY CLAIMS.
9.4.1. For purposes of this Section 9.4, "Indemnifiable Damages"
means Xxxxxxxxx Indemnifiable Damages or Shareholder Indemnifiable Damages, as
the context requires, "Indemnified Party" means a Xxxxxxxxx Indemnified Party or
a Shareholder Indemnified Party, as the context requires, and "Indemnifying
Party" means the party (Xxxxxxxxx or the Shareholder) against whom a claim for
Indemnifiable Damages is to be made.
9.4.2. If any claim or action shall be commenced or asserted
against an Indemnified Party which, if successful, would give rise to
Indemnifiable Damages, the Indemnified Party shall give the Indemnifying Party
prompt notice of such claim or action (provided that the failure to give such
notice shall not relieve the Indemnifying Party of its indemnification
obligations except where, and solely to the extent that, the failure to provide
such notice actually and materially prejudices the rights of the Indemnifying
Party). Upon notice of any such claim or action, the Indemnifying Party shall
proceed, at its own cost and expense, to diligently defend such claim or action.
The Indemnified Party shall have the right to employ separate legal counsel in
any such claim and
41
participate in the defense thereof, but the fees and expenses of such other
counsel shall be at the expense of the Indemnified Party and not subject to
indemnification under this Agreement unless (i) the Indemnifying Party shall
have authorized in writing the employment of counsel by the Indemnified Party
and shall have agreed in writing to pay the costs and expenses thereof, (ii) the
Indemnifying Party shall have failed to diligently defend such action, or (iii)
the parties to such action (including any impleaded parties) include the
Indemnified Party, and such party has been advised by legal counsel that there
may be legal defenses available to it which are different from, in addition to,
or inconsistent with the legal defenses available to the Indemnifying Party, or
that the Indemnified Party's interest may be adverse in whole or in part to the
interest of the Indemnifying Party.
9.4.3. The Indemnifying Party shall not, in the defense of any
claim or action, except with the prior written consent of the Indemnified Party,
consent to entry of a judgment or enter into any settlement or compromise
provides for injunctive or equitable relief against the Indemnified Party or
otherwise provides for any continuing obligations, or any loss of rights, of the
Indemnified Party (other than in the case of Assumed Litigation, the rights of
Solair to any benefits that may accrue or arise from the Assumed Litigation).
9.5. SET OFF AGAINST THE ESCROWED AMOUNT. As security for Xxxxxxxxx'x
rights under Section 9.1 hereof, at Closing Xxxxxxxxx shall deliver the Escrowed
Amount to the Escrow Agent. The Shareholder hereby grants Xxxxxxxxx a security
interest in the Escrowed Amount, and Xxxxxxxxx hereby grants the Shareholder a
security interest in the Escrowed Amount (which lien may be assigned by the
Shareholder to the lenders under its revolving credit facility). Xxxxxxxxx may
claim against the Escrowed Amount any Indemnifiable Damages for which the
Shareholder may be responsible pursuant to this Agreement, subject, however, to
the following terms and conditions:
9.5.1. Xxxxxxxxx shall give written notice to the Escrow Agent and
the Shareholder of any claim for Indemnifiable Damages or any other damages
hereunder, which notice shall set forth (i) the amount of Indemnifiable Damages
or other loss, damage, cost or expense which Xxxxxxxxx claims to have sustained
by reason thereof, and (ii) the basis of the claim therefor;
9.5.2. The Escrow Agent shall deliver such Indemnifiable Damages
to Xxxxxxxxx on the later to occur of the expiration of ten (10) days from the
date of such notice (the "Notice of Contest Period") or, if such claim is
contested, the date the dispute is resolved, and such amount, if any, shall be
charged against and reduce the Escrowed Amount; and
9.5.3. If, prior to the expiration of the Notice of Contest
Period, the Shareholder shall notify the Escrow Agent and Xxxxxxxxx in writing
of an intention to dispute the claim and if such dispute is not resolved within
thirty (30) days after expiration of such period, then Xxxxxxxxx may take any
action or exercise any remedy available to it by appropriate legal proceedings
to enforce its rights and remedies hereunder.
9.6. DELIVERY OF ESCROWED AMOUNT. The Escrow Agent shall deliver to the
Shareholder no later than ten (10) business days following the eighteen (18)
month anniversary of the Closing Date any Escrowed Amount then held by it unless
there then remains unresolved any claim for Indemnifiable Damages as to which
notice has been given, in which event the Escrow Agent shall deliver to the
Shareholder any Escrowed Amount in excess of the maximum amount of damages at
issue in connection with any then unresolved claim, and any Escrowed Amount
remaining on deposit after such claim shall have been satisfied shall be
returned to the Shareholder promptly after the time of satisfaction.
9.7. NO BAR; WAIVER. If the Escrowed Amount is insufficient to set off
any claim for Indemnifiable Damages made hereunder (or has been delivered to the
Shareholder prior to the making or resolution of such claim), then Xxxxxxxxx may
take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages to which it may be entitled
under Section 9.1.
42
9.8. ADJUSTMENT TO PURCHASE PRICE. All set offs, recoupments and
payments for Indemnifiable Damages made pursuant to this Article shall be
treated as adjustments to the Purchase Price.
9.9. WAIVER. The Shareholder hereby waives any right to contribution or
any similar rights it may have against Solair as a result of the Shareholder's
agreement to indemnify Xxxxxxxxx under this Article IX.
9.10. REMEDIES. The remedies provided herein shall be the sole remedies
for Indemnifiable Damages, but shall not preclude any party from asserting any
other rights, or seeking any other remedies, against each other for fraud or
from seeking any equitable relief notwithstanding anything to the contrary
contained herein.
9.11. REDUCTION FOR TAX BENEFIT. To the extent that any Xxxxxxxxx
Indemnified Party shall receive any tax benefit as a result of any Xxxxxxxxx
Indemnifiable Damages, the amount payable by the Shareholder on account of such
Xxxxxxxxx Indemnifiable Damages shall be reduced by the amount of the tax
benefit actually received by the Xxxxxxxxx Indemnified Party (assuming the
application of the highest marginal State and Federal tax rates applicable to
the Xxxxxxxxx Indemnified Party in the year in which such tax benefit is
received). To the extent that any Shareholder Indemnified Party shall receive
any tax benefit as a result of any Shareholder Indemnifiable Damages, the amount
payable by Xxxxxxxxx on account of such Shareholder Indemnifiable Damages shall
be reduced by the amount of the tax benefit actually received by the Shareholder
Indemnified Party (assuming the application of the highest marginal State and
Federal tax rates applicable to the Shareholder Indemnified Party in the year in
which such tax benefit is received).
9.12. REDUCTION FOR INSURANCE PROCEEDS. To the extent that any Xxxxxxxxx
Indemnified Party shall receive payment under any insurance policies on account
of damages which constitute Xxxxxxxxx Indemnifiable Damages which are payable to
the Xxxxxxxxx Indemnified Party under the terms of Section 9.1, (a) if the
Shareholder shall have paid the Xxxxxxxxx Indemnified Party under this Article
IX on account of such Xxxxxxxxx Indemnifiable Damages, then such Xxxxxxxxx
Indemnified Party shall repay (or if it shall fail to repay, then Xxxxxxxxx
shall pay) to the Shareholder the amount of such payment up to the amount
actually received by the Xxxxxxxxx Indemnified Party under such insurance
policies (net of any costs incurred by the Xxxxxxxxx Indemnified Party in
collecting under such insurance policies), (b) if the Shareholder shall be
required to pay (but shall not yet have paid) the Xxxxxxxxx Indemnified Party
under this Article IX on account of such Xxxxxxxxx Indemnifiable Damages, then
Xxxxxxxxx and the Xxxxxxxxx Indemnified Party shall credit to the Shareholder
the amount of such payment up to the amount actually received by the Xxxxxxxxx
Indemnified Party under such insurance policies (net of any costs incurred by
the Xxxxxxxxx Indemnified Party in collecting under such insurance policies),
and (c) any such amount repaid, paid or credited to the Shareholder shall not be
deemed Xxxxxxxxx Indemnifiable Damages for purposes of calculating whether the
Xxxxxxxxx Indemnification Threshold shall have been met. To the extent that any
Shareholder Indemnified Party shall receive payment under any insurance policies
on account of damages which constitute Shareholder Indemnifiable Damages which
are payable to the Shareholder Indemnified Party under the terms of Section 9.2,
(x) if Xxxxxxxxx shall have paid the Shareholder Indemnified Party under this
Article IX on account of such Shareholder Indemnifiable Damages, then such
Shareholder Indemnified Party shall repay (or if it shall fail to repay, then
the Shareholder shall pay) to Xxxxxxxxx the amount of such payment up to the
amount actually received by the Shareholder Indemnified Party under such
insurance policies (net of any costs incurred by the Shareholder Indemnified
Party in collecting under such insurance policies), (y) if Xxxxxxxxx shall be
required to pay (but shall not yet have paid) the Shareholder Indemnified Party
under this Article IX on account of such Shareholder Indemnifiable Damages, then
the Shareholder and the Shareholder Indemnified Party shall credit to Xxxxxxxxx
the amount of such payment up to the amount actually received by the Shareholder
Indemnified Party under such insurance policies (net of any costs incurred by
the Shareholder Indemnified Party in collecting under such insurance policies),
and (z) any such amount repaid, paid or credited to Xxxxxxxxx shall not be
deemed Shareholder Indemnification Damages for purposes of calculating whether
the Shareholder Indemnification Threshold shall have been met. Notwithstanding
anything to the contrary set forth herein, no party required to make a payment
under Sections 9.1 or 9.2 of this Agreement shall be permitted to delay making
such payment when due on account of the availability of any insurance policies
to the party to which such payment is to be made.
43
ARTICLE 10.
TERMINATION
10.1. TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
10.1.1. by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
10.1.2. by Xxxxxxxxx in the event of a material breach (including,
without limitation, a failure to close upon the fulfillment of all conditions to
Closing under the terms of this Agreement) by Solair or the Shareholder of any
provision of this Agreement which breach is not cured within fifteen (15) days
of the Shareholder's receipt of written notice thereof from Xxxxxxxxx or which
breach by its nature cannot be cured prior to Closing; or
10.1.3. by the Shareholder in the event of a material breach
(including, without limitation, a failure to close upon the fulfillment of all
conditions to Closing under the terms of this Agreement) by Xxxxxxxxx of any
provision of this Agreement which breach is not cured within fifteen (15) days
of Xxxxxxxxx'x receipt of written notice thereof from the Shareholder or which
breach by its nature cannot be cured prior to Closing; or
10.1.4. by either party in the event that the Closing shall not
have occurred on or prior to January 30, 1999; provided, however, that any party
shall have the right to extend such date for up to an additional thirty (30)
days upon written notice to the other parties in the event that the only
then-unsatisfied condition to Closing is the receipt of one or more consents
required to be delivered pursuant to Section 7.4 or the expiration or
termination of any applicable HSR Act waiting period as required pursuant to
Sections 7.6 and 8.4.
10.2. EFFECT OF TERMINATION.
10.2.1. Subject to the remainder of this Section 10.2 below,
except for the provisions of Article IX hereof, which shall survive any
termination of this Agreement, in the event of termination of this Agreement
pursuant to Section 10.1 (or pursuant to any other provision hereof expressly
permitting termination), this Agreement and the Tax Agreement shall forthwith
become void and of no further force and effect and the parties shall be released
from any and all obligations and liabilities hereunder; provided, however, that
nothing herein shall relieve any party from liability for fraud or any act in
the nature of fraud committed in connection with any of its representations,
warranties, covenants or agreements set forth in this Agreement. Notwithstanding
anything to the contrary set forth herein, the Confidentiality Agreement shall
survive any termination of this Agreement.
10.2.2. In the event that Xxxxxxxxx shall elect to terminate this
Agreement under Section 10.1(b) and all of the conditions to closing set forth
in Article VIII (other than Section 8.2) shall have been met (except that the
Escrow Agent need not have executed and delivered the Escrow Agreement) and
Xxxxxxxxx shall have demonstrated that it was ready, willing and able to close
then, notwithstanding anything to the contrary in this Agreement, there shall be
no limitation on the liability of Solair or the Shareholder, and Xxxxxxxxx shall
be entitled to all remedies available at law or under this Agreement.
10.2.3. In the event that the Shareholder shall elect to terminate
this Agreement under Section 10.1(c) and all of the conditions to closing set
forth in Article VII (other than Section 7.9) shall have been met (except that
the Escrow Agent need not have executed and delivered the Escrow Agreement), and
the Shareholder shall have demonstrated that it was ready, willing and able to
close then, notwithstanding anything to the contrary in this Agreement, there
shall be no limitation on the liability of Xxxxxxxxx, and Solair and the
Shareholder shall be entitled to all remedies available at law or under this
Agreement.
44
ARTICLE 11.
GENERAL PROVISIONS
11.1. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other parties or addresses or telecopy numbers which such party
shall designate in writing to the other party):
11.1.1. IF TO XXXXXXXXX TO:
Xxxxxxxxx Industries, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Zivi X. Xxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
(b) IF TO SOLAIR (PRIOR TO CLOSING) AND/OR THE
SHAREHOLDER TO:
Banner Aerospace, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx,
Senior Vice President and Chief Operating Officer
Telecopy: (000) 000-0000
45
WITH A COPY TO:
Banner Aerospace, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
General Counsel
Telecopy: (000) 000-0000
AND TO:
Gunster, Yoakley, Xxxxxx-Xxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Notice shall be deemed given on the date sent if sent by facsimile transmission
and on the date delivered (or the date of refusal of delivery) if sent by
overnight delivery, or certified or registered mail.
11.2. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto), the Confidentiality Agreement and Tax Agreement and
other documents delivered at the Closing pursuant hereto, contain the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The Exhibits and Schedules
constitute a part hereof as though set forth in full above. Without limiting the
generality of the foregoing, neither party shall be deemed to make any
representation or warranty other than those expressly set forth in this
Agreement (including the Schedules and Exhibits hereto) the Tax Agreement or any
certificate or agreement signed by any of the parties and delivered at or in
connection with the Closing.
11.3. EXPENSES. Except as otherwise provided herein, the Shareholder
shall pay its own and Solair's fees and expenses, including accounting and
counsel fees, incurred in connection with this Agreement and the transactions
contemplated hereby, and Xxxxxxxxx shall pay its own fees and expenses,
including accounting and counsel fees, incurred in connection with this
Agreement and the transactions contemplated hereby. Any HSR fees of, and any
documentary stamp or intangible taxes imposed on, the parties hereto in
connection with the transactions contemplated hereby shall be split equally
between Xxxxxxxxx and the Shareholder.
11.4. AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
46
11.5. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective heirs, executors, personal representatives, trustees, guardians,
attorneys-in-fact, successors and assigns. Nothing expressed or implied herein
shall be construed to give any other person any legal or equitable rights
hereunder. Except as expressly provided herein, the rights and obligations of
this Agreement may not be assigned or delegated by any of the parties hereto
without the prior written consent of the non-assigning or non-delegating
parties.
11.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11.7. INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Time shall be of the essence in this Agreement.
11.8. SEVERABILITY. If any word, phrase, sentence, clause, section,
subsection or provision of this Agreement as applied to any party or to any
circumstance is adjudged by a court to be invalid or unenforceable, the same
will in no way affect any other circumstance or the validity or enforceability
of any other word, phrase, sentence, clause, section, subsection or provision of
this Agreement. If any provision of this Agreement, or any part thereof, is held
to be unenforceable because of the duration of such provision or the area
covered thereby or otherwise, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable.
11.9. GOVERNING LAW; JURISDICTION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. Any suit, action or proceeding against Xxxxxxxxx, Xxxxxx or the
Shareholder arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof may be brought in the courts of Broward
County, Florida or in the U.S. District Court for the Southern District of
Florida and each party hereby irrevocably accepts and consents to the
non-exclusive personal jurisdiction of those courts for the purpose of any
suit, action or proceeding. In addition, each of Xxxxxxxxx, Xxxxxx and the
Shareholder hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in Broward County,
Florida or the U.S. District Court for the Southern District of Florida and
hereby further irrevocably waives any claim that any suit, action or
proceedings brought in Broward County, Florida or in such District Court has
been brought in an inconvenient forum.
11.10. ARM'S LENGTH NEGOTIATIONS. Each party herein expressly agrees that
(a) before executing this Agreement, said party has fully informed itself of the
terms, contents, conditions and effects of this Agreement; (b) said party has
relied solely and completely upon its own judgment in executing this Agreement;
(c) said party has had the opportunity to seek and has obtained the advice of
counsel before executing this Agreement; (d) said party has acted voluntarily
and of its own free will in executing this Agreement; (e) said party is not
acting under duress, whether economic or physical, in executing this Agreement;
and (f) this Agreement is the result of arm's length negotiations conducted by
and among the parties and their respective counsel.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
XXXXXXXXX INDUSTRIES, INC., a
Delaware corporation
By:
--------------------------------
Zivi X. Xxxxxx
President and CEO
SOLAIR, INC., a Florida corporation
By:
--------------------------------
Xxxxxx X. Xxxxxxxxx
Vice President
BANNER AEROSPACE, INC., a Delaware
corporation
By:
--------------------------------
Xxxxxx X. Xxxxxxxxx
Senior Vice President
and Chief Operating Officer
The undersigned hereby agrees to sell the shares representing his
interest in Banner Aerospace (U.K.) Limited free and clear of any Liens (as
defined in the foregoing Stock Purchase Agreement) for the sum of One Dollar
($1.00) to Xxxxxxxxx Industries, Inc. ("Xxxxxxxxx") or its designee on the
Closing Date (as defined in the foregoing Stock Purchase Agreement) and to
endorse such shares in blank or execute such documents as may be necessary to
transfer such shares to Xxxxxxxxx or its designee, and hereby joins in the
foregoing Stock Purchase Agreement for the purposes of agreeing to Section 11.9
thereof. The foregoing agreement is subject to all of the conditions precedent
set forth in Article VIII of the foregoing Stock Purchase Agreement, and
consummation of the sale and delivery of such shares shall occur at the Closing
contemplated in Section 2.5 of the foregoing Stock Purchase Agreement.
-----------------------------------
Xxxxxx X. Xxxxxxxxx, individually
but only as to the foregoing
paragraph
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Escrow Agreement
Exhibit B Form of Xxxxxxxxx Guarantee
Exhibit C Form of Tax Agreement
Exhibit D Form of Warrant
Exhibit E Form of Release
Schedule 1.1(a) Designated Inventory
Schedule 1.1(b) Modified GAAP
Schedule 1.1(c) Liens for Contested Taxes
Schedule 3.4 Xxxxxxxxx Consents
Schedule 3.6 Due Diligence Request Lists
Schedule 4.1 Foreign Qualifications/Names
Schedule 4.5 Liens on Shares
Schedule 4.6 Violations/Consents
Schedule 4.9 Financial Statements/Current Balance Sheet
Schedule 4.10 Changes Since the Current Balance Sheet Date
Schedule 4.11 Liabilities of Solair
Schedule 4.12 Litigation
Schedule 4.13 Environmental Matters
Schedule 4.14 Leased Premises
Schedule 4.15 Assets - Exceptions; Liens
Schedule 4.15(a) Assets
Schedule 4.15(b) Vehicles
Schedule 4.16 Restrictions on Business or Operations
Schedule 4.17 Employees
Schedule 4.18 Employee Benefit Plans
Schedule 4.19 Tax Matters
Schedule 4.20 Insurance Matters
Schedule 4.21 Licenses and Permits
Schedule 4.22 Affiliated Transactions
Schedule 4.24 Designated Contracts
Schedule 4.26 Bank Accounts
Schedule 5.1 Conduct of Business Pending the Acquisition
Schedule 6.6 Restricted Parties
Schedule 6.12 Resignations
Schedule 6.15 Assumed Litigation
Schedule 6.16 Guarantees
Schedule 6.17 Liabilities of Banner Aerospace-Singapore, Inc.
Schedule 6.19 Designated Employment Contracts
Schedule 6.20 Other Liabilities Relating to a Change in Control
Schedule 7.4 Required Consents Under Designated Contracts
49
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 6
ARTICLE II PURCHASE AND SALE OF SHARES 7
2.1 The Acquisition 7
2.2 Purchase Price 7
2.3 Payment of Estimated Purchase Price 8
2.4 Closing Date Payment Adjustment 8
2.5 The Closing 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX 10
3.1 Corporate Status 10
3.2 Corporate Power and Authority 10
3.3 Enforceability 10
3.4 No Violation 10
3.5 No Commissions 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OFSOLAIR AND THE SHAREHOLDER 12
4.1 Corporate Status 12
4.2 Power and Authority 12
4.3 Enforceability 12
4.4 Capitalization 13
4.5 Shareholders 13
4.6 No Violation 13
4.7 Records of Solair 14
4.8 Subsidiaries 14
4.9 Financial Statements 14
4.10 Changes Since the Current Balance Sheet Date 15
4.11 Liabilities of Solair and Banner Aerospace (U.K.) Limited 15
4.12 Litigation 16
4.13 Environmental Matters 16
4.14 Real Estate 19
4.15 Good Title to and Condition of Assets 20
4.16 Compliance with Laws 21
4.17 Labor and Employment Matters 21
4.18 Employee Benefit Plans 22
4.19 Tax Matters 24
4.20 Insurance 27
4.21 Licenses and Permits 27
50
Page
----
4.22 Adequacy of the Assets; Relationships with Customers and
Suppliers; Affiliated Transactions 27
4.23 Intellectual Property 28
4.24 Contracts 28
4.25 Accuracy of Information Furnished by Solair or the
Shareholder 29
4.26 Bank Accounts 29
4.27 No Commissions 29
ARTICLE V CONDUCT OF BUSINESS PENDING THE ACQUISITION 30
5.1 Conduct of Business by Solair Pending the Acquisition 30
ARTICLE VI ADDITIONAL AGREEMENTS 32
6.1 Further Assurances 32
6.2 Cooperation 32
6.3 HSR Act and Other Actions 32
6.4 Mutual Cooperation 33
6.5 Notification of Certain Matters 33
6.6 Restrictive Covenants 33
6.7 Confidentiality; Publicity 34
6.8 No Other Discussions 35
6.9 Trading in Common Stock of Xxxxxxxxx or the Shareholder 35
6.10 Shareholder Vote 35
6.11 Delivery of Shares 36
6.12 Resignations 36
6.13 Escrow Agreement and Tax Agreement 36
6.14 Receivables 36
6.15 Assumption of Litigation 37
6.16 Assumption of Guarantees 37
6.17 Contribution of Assets of Banner Singapore 38
6.18 Change of Name. 38
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX 43
7.1 Accuracy of Representations and Warranties and Compliance
with Obligations 43
7.2 No Material Adverse Change or Destruction of Property 43
7.3 Corporate Certificate 43
7.4 Consents 44
7.5 No Adverse Litigation 44
7.6 HSR Act Waiting Period 44
7.7 UCC Filings 44
7.8 Resignations 44
7.9 Delivery of Shares and Records and Lease Termination Fee 44
7.10 Delivery of Escrow Agreement and Tax Agreement 45
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OFTHE SHAREHOLDER 45
51
Page
----
8.1 Accuracy of Representations and Warranties and Compliance
with Obligations 45
8.2 Purchase Price 46
8.3 No Order or Injunction 46
8.4 HSR Act Waiting Period 46
8.5 Delivery of Escrow Agreement and Tax Agreement 46
ARTICLE IX INDEMNIFICATION 46
9.1 Agreement by the Shareholder to Indemnify 46
9.2 Agreement by Xxxxxxxxx to Indemnify 47
9.3 Survival of Representations and Warranties 48
9.4 Third Party Claims 49
9.5 Set Off Against the Escrowed Amount 50
9.6 Delivery of Escrowed Amount 50
9.7 No Bar; Waiver 51
9.8 Adjustment to Purchase Price 51
9.9 Waiver 51
9.10 Remedies 51
9.11 Reduction for Tax Benefit 51
ARTICLE X TERMINATION 52
10.1 Termination 52
10.2 Effect of Termination 53
ARTICLE XI GENERAL PROVISIONS 54
11.1 Notices 54
11.2 Entire Agreement 55
11.3 Expenses 55
11.4 Amendment; Waiver 55
11.5 Binding Effect; Assignment 56
11.6 Counterparts 56
11.7 Interpretation 56
11.8 Severability 56
11.9 Governing Law; Jurisdiction 56
11.10 Arm's Length Negotiations 57
52
INDEX OF DEFINED TERMS
Page
----
Agreement 1
Xxxxxxxxx 1
Solair 1
Shareholder 1
Acquisition 1
Affiliate 2
Common Stock 2
Confidentiality Agreement 2
Contract 2
Designated Accountants 3
Exchange Act 3
Familial Affiliate, 3
GAAP 3
Governmental Authority 3
HSR Act 4
Indebtedness 4
Independent Accountants 4
Lien 4
Material Adverse Change (or Effect) 4
Modified GAAP 4
Net Worth 4
Permitted Liens 5
Person 5
Receivables 5
SEC 5
Shares 6
Tax Agreement 6
Tax Return 6
Taxes 6
include," "includes" or "including 7
knowledge 7
Purchase Price 7
Estimated Purchase Price 8
Escrow Agent 8
Escrowed Amount 8
Closing Date Payment 8
Audited Closing Date Balance Sheet 8
Closing Date Payment Certificate 8
Actual Purchase Price 8
Closing 9
Closing Date 9
53
Page
----
Annual Financial Statements 14
Current Balance Sheet 14
Financial Statements 14
Notices 16
Proceedings 16
Aboveground Storage Tank 18
Discharge 18
Environmental Laws 18
CERCLA 00
XXXX 00
FIFRA 18
EPCRA 19
OSHA 19
Handle 19
Hazardous Substances 19
Licenses 19
Underground Storage Tank 19
Leases 19
Leased Premises 19
Assets 20
Immigration Act 21
Insurance Policies 27
Permits 27
Intellectual Property 28
Designated Contracts 28
Escrow Agreement 36
Assumed Litigation 37
Xxxxxxxxx Indemnified Party 46
Xxxxxxxxx Indemnified Parties 46
Xxxxxxxxx Indemnifiable Damages 47
Xxxxxxxxx Indemnification Threshold 47
Xxxxxxxxx Indemnification Cap 47
Shareholder Indemnified Party 47
Shareholder Indemnified Parties 47
Shareholder Indemnifiable Damages 48
Shareholder Indemnification Threshold 48
Shareholder Indemnification Cap 48
Notice of Contest Period 50
54
EXHIBIT A
FORM OF ESCROW AGREEMENT
This Escrow Agreement (the "Escrow Agreement") is entered into as of
___________, 1998, among Xxxxxxxxx Industries, Inc., a Delaware corporation
("Xxxxxxxxx"), Banner Aerospace, Inc, a Delaware corporation ("Banner"), and
__________________ (the "Escrow Agent").
RECITALS
Xxxxxxxxx and Banner are parties to that certain Stock Purchase Agreement
dated as of December 5, 1998 (the "Purchase Agreement"), pursuant to which
Xxxxxxxxx is to acquire from Banner all of the issued and outstanding shares of
capital stock of Solair, Inc., a Florida corporation. Pursuant to the Purchase
Agreement, the parties have agreed that a portion of the Purchase Price (as
defined in the Purchase Agreement) be held in escrow (the "Escrowed Amount") as
security for Banner's indemnification obligations thereunder. The parties desire
that the Escrow Agent hold and distribute the Escrowed Amount pursuant to the
provisions of the Purchase Agreement and this Escrow Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. DEFINED TERMS.
All capitalized terms used herein shall have the meanings ascribed to
them in the Purchase Agreement, unless otherwise specifically defined herein.
2. DEPOSIT OF ESCROW AMOUNT.
Xxxxxxxxx shall contemporaneously with the execution and delivery of this
Escrow Agreement deposit or cause to be deposited with the Escrow Agent the sum
of Five Million Dollars ($5,000,000) (together with any accrued interest
thereon, the "Proceeds") representing the Escrowed Amount.
55
3. INSTRUCTIONS FOR ESCROW AGENT.
Unless written instructions to the contrary executed by both Xxxxxxxxx
and Banner are delivered to the Escrow Agent, the Escrow Agent shall hold,
disburse and deliver the Proceeds in strict accordance with the following
instructions:
(a) The Escrow Agent shall cause the Proceeds to be maintained
in interest bearing accounts in federally insured commercial banking
institutions.
(b) The Escrow Agent shall not release any portion of the
Proceeds except in accordance with Sections 4, 7 or 10 hereof.
(c) After the distribution of all Proceeds in accordance with
this Escrow Agreement and the Purchase Agreement, the duties and obligations of
Escrow Agent shall end and Escrow Agent shall be released from all further
responsibilities, liabilities and obligations.
4. RELEASE OF ESCROWED AMOUNT.
(a) In the event that Xxxxxxxxx contends that it is entitled to
recover against the security of the Escrowed Amount pursuant to the provisions
of the Purchase Agreement, it shall give written notice to the Escrow Agent and
Banner (the "Claim Notice") specifying the amount of Indemnifiable Damages or
other loss, damage, cost or expense which Xxxxxxxxx claims to have sustained by
reason thereof (the "Claimed Amount") and stating in reasonable detail the basis
for Xxxxxxxxx'x claim therefor. If no notice of objection from Banner is
received by the Escrow Agent within thirty (30) days from the date of such
notice, Banner shall be deemed not to have objected and the Escrow Agent shall
thereupon distribute to Xxxxxxxxx the Claimed Amount specified by Xxxxxxxxx in
the Claim Notice, and shall hold the balance of the Proceeds in accordance with
the terms of this Escrow Agreement. If, however, notice of objection is received
from Banner within such thirty (30) day period, the Escrow Agent shall retain
the disputed portion in the escrow account until it receives written notice from
Banner and Xxxxxxxxx that the dispute has been resolved, or until entry of a
final judgment in the matter by a court from which no further appeal can be
taken or entry of a binding arbitration order from which no further appeal can
be taken ("Unresolved Claim"), and the Escrow Agent shall thereupon make
distribution of the disputed amount in accordance with the signed agreement or
order and with the provisions of this Escrow Agreement. Any notice from either
party to the Escrow Agent hereunder shall also be given to the other party.
(b) Within ten (10) business days after the eighteen (18) month
anniversary of the date hereof, the Escrow Agent shall (a) continue to hold in
escrow pursuant to Section 4(a) above, the amount of Proceeds necessary to
satisfy any Unresolved Claim and (b) release to Banner the remaining Proceeds
then held in escrow.
(c) Banner hereby acknowledges and agrees that the Escrowed
Amount is being held in escrow to secure its obligations under Article IX of the
Purchase Agreement. Accordingly,
2
56
Banner hereby agrees, represents and warrants that it has granted Xxxxxxxxx a
security interest in and to the Proceeds and that it will not otherwise
encumber, pledge, hypothecate or otherwise cause any other lien or charge, of
any nature whatsoever, to be placed on or against the Proceeds, by any Person
(other than Xxxxxxxxx). Xxxxxxxxx hereby acknowledges and agrees that the Escrow
Amount is being held in escrow to secure Banner's obligations under Article XI
of the Purchase Agreement and that Banner is entitled to the release of any
amount not used to satisfy any such claim, subject to and on the terms and
conditions set forth in this Agreement. Xxxxxxxxx hereby represents and warrants
that it has granted Banner a security interest in and to the Proceeds (and
agreed that Banner may assign such security interest to the lenders under its
revolving credit facility) and that it will not otherwise encumber, pledge,
hypothecate or otherwise cause any other lien or charge, of any nature
whatsoever to be placed on or against the Proceeds by any Person (other than
Banner). The Escrow Agent shall note on its books and records and shall request
that any bank or other financial institution holding Proceeds at any time note
on its books and records the security interest granted to Xxxxxxxxx and Banner.
5. DUTIES OF ESCROW AGENT.
The Escrow Agent undertakes to perform only such duties as are set forth
herein, or as set forth in duly authorized written instructions contemplated
herein or in the Purchase Agreement, and no additional duties or obligations
shall be implied in this Escrow Agreement against the Escrow Agent.
6. RELIANCE OF ESCROW AGENT ON DOCUMENTS.
The Escrow Agent may act in reliance upon any writing, instrument or
signature which it, in good faith, believes to be genuine, may assume the
validity and accuracy of any statement or assertion contained in such writing or
instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner
regarding the execution or validity of any instrument deposited in or relating
to this escrow, nor as to the identity, authority or right of any person
executing the same and its duties hereunder shall be limited to the safekeeping
of the Proceeds, and for the disposition of the same in accordance with this
Escrow Agreement.
3
57
7. INDEMNIFICATION OF ESCROW AGENT.
Unless the Escrow Agent discharges any of its duties hereunder in a
grossly negligent manner or is guilty of willful misconduct with regard to its
duties hereunder, Banner and Xxxxxxxxx hereby agree to jointly and severally
indemnify and hold the Escrow Agent harmless from any and all claims,
liabilities, losses, damages or any other expenses, including fees or charges of
any character or nature which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Escrow Agreement, and in
connection therewith, to jointly and severally indemnify and hold the Escrow
Agent harmless from and against any and all expenses including reasonable
attorneys' fees and the cost of defending any action, suit or proceeding or
resisting any claim.
8. DISCRETION OF ESCROW AGENT TO FILE AN INTERPLEADER ACTION IN THE
EVENT OF DISPUTE.
If any parties to this Escrow Agreement shall be in disagreement about
the interpretation of this Escrow Agreement, or about the rights and
obligations, or the propriety of any action contemplated by the Escrow Agent
hereunder, the Escrow Agent may, but shall not be required to, file an action of
interpleader in a court of competent jurisdiction and deposit the Proceeds in
the registry of such court. Banner and Xxxxxxxxx hereby agree to jointly and
severally indemnify the Escrow Agent for all costs, including reasonable
attorneys' fees incurred by it, in connection with the aforesaid interpleader
action, and the Escrow Agent shall be fully protected in suspending all or part
of its activities under this Escrow Agreement until a final judgment or other
appropriate order in the interpleader action is received.
The Escrow Agent, in the event it is in doubt about its duties and
obligations hereunder as Escrow Agent, shall also have the right, but not the
duty, to so notify in writing Banner and Xxxxxxxxx and, thereafter, the Escrow
Agent shall not be obligated to deliver or release any of the Proceeds unless
(i) both Banner and Xxxxxxxxx have jointly directed the Escrow Agent to deliver
Proceeds, or (ii) a final order by a court of competent jurisdiction, from which
no appeal has been taken and appeal time expired or, if taken, has become final,
to which the Escrow Agent, Banner and Xxxxxxxxx are all parties has been entered
directing the Escrow Agent to take certain action with respect to the Proceeds.
9. CONSULTATION WITH COUNSEL.
The Escrow Agent may, at its own expense, consult with counsel of its own
choice and shall have full and complete authorization and protection for acting
in accordance with the opinion of such counsel. The Escrow Agent shall otherwise
not be liable for any mistakes of fact or errors of judgment or for any acts or
omissions of any kind unless caused by its gross negligence or willful
misconduct.
4
58
10. RESIGNATION OF ESCROW AGENT.
The Escrow Agent may resign upon twenty (20) days' written notice to
Banner and Xxxxxxxxx, subject to a successor being appointed jointly by Banner
and Xxxxxxxxx. If a successor escrow agent is not appointed by Banner and
Xxxxxxxxx within such twenty day period, the Escrow Agent may, but shall have no
duty to, petition a court of competent jurisdiction to name a successor. In such
event, the Escrow Agent shall have no further duties or obligations whatsoever
upon the expiration of said period until such time as a successor escrow agent
is appointed by the court and, at such time, the sole duty of the Escrow Agent
shall be to deliver the Proceeds to the successor escrow agent.
11. FEES OF ESCROW AGENT.
Escrow Agent shall charge no fees for its services as such hereunder;
provided, however, in the event the Escrow Agent incurs out-of-pocket costs and
expenses other than in the normal course of discharge of its duties hereunder
and any suit or claim arises, then, in such event, as between Banner and
Xxxxxxxxx, the non-prevailing party in said dispute shall be responsible for
such additional costs and expenses of the Escrow Agent.
12. NOTICES.
Any notice, affidavit or communication made by a party hereunder shall be
delivered to each other party and, except for Escrow Agent, to their respective
counsel. Notices given pursuant to this Agreement must be in writing. They shall
be deemed to have been duly given: (i) upon delivery or refusal to accept
delivery, if hand-delivered; (ii) when transmitted, if sent by fax with
confirmed receipt, followed by a "confirmation" copy delivered by any other
method specified in this Section 11; or (iii) one (1) business day after being
deposited for next-day delivery with Federal Express or other national overnight
courier service. In each case, notice shall be addressed as follows:
(a) IF TO ESCROW AGENT TO:
----------------------------------
----------------------------------
----------------------------------
(b) IF TO XXXXXXXXX TO:
Xxxxxxxxx Industries, Inc.
00000 X.X. 0xx Xxxxxx
Xxxxxxx, XX 00000
Attn: Zivi X. Xxxxxx, President
Telecopy: (000) 000-0000
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WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
(c) IF TO BANNER TO:
Banner Aerospace, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx
Senior Vice President & Chief Operating
Officer
Telecopy: (000) 000-0000
WITH A COPY TO:
Banner Aerospace, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
General Counsel
Telecopy: (000) 000-0000
AND TO:
Gunster, Yoakley, Xxxxxx-Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxx
Suite 000 Xxxx Xxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or to such other place and with such other concurrent copies as Escrow Agent,
Banner or Xxxxxxxxx may subsequently designate by written notice. Any party may
change the address to which notices are to be given by giving written notice of
such change to the other parties pursuant to this Escrow Agreement.
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13. SUCCESSORS AND ASSIGNS.
The rights created by this Escrow Agreement shall inure to the benefit
of, and the obligations created hereby shall be binding upon, the successors and
assigns of Banner, Xxxxxxxxx and the Escrow Agent.
14. SEVERABILITY.
If any word, phrase, sentence, clause, section, subsection or provision
of this Escrow Agreement as applied to any party or to any circumstance is
adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of any other
word, phrase, sentence, clause, section, subsection or provision of this Escrow
Agreement. If any provision of this Escrow Agreement, or any part thereof, is
held to be unenforceable because of the duration of such provision or the area
covered thereby or otherwise, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced.
15. TERMINATION.
This Escrow Agreement shall terminate and the Escrow Agent shall be
discharged of all responsibility hereunder pursuant to the order of a court of
competent jurisdiction or otherwise at such time as the Escrow Agent shall have
completed its duties under Section 4 or has resigned as set forth in Section 10,
as the case may be; provided, however, that the provisions of this Escrow
Agreement that are meant by their context to survive said termination shall
remain in full force and effect, unless otherwise modified by entry of an order
by a court of competent jurisdiction.
16. NO THIRD PARTY BENEFICIARY.
It is the intent of the parties hereto that this Escrow Agreement is
solely among the parties to this Escrow Agreement and no person not a party to
this Escrow Agreement shall have any rights or privileges hereunder as third
party beneficiary or otherwise.
17. ENTIRE AGREEMENT.
This Escrow Agreement contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter.
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18. AMENDMENT; WAIVER. This Escrow Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Escrow Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall any
waiver be implied from any course of dealing between the parties. No extension
of time for performance of any obligations or other acts hereunder or under any
other agreement shall be deemed to be an extension of the time for performance
of any other obligations or any other acts. The rights and remedies of the
parties under this Escrow Agreement are in addition to all other rights and
remedies, at law or equity, that they may have against each other.
19. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Escrow Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this Escrow
Agreement may not be assigned by either party without the prior written consent
of the other party.
20. COUNTERPARTS. This Escrow Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
21. GOVERNING LAW; JURISDICTION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. Any suit, action or proceeding against Solair or the Shareholder arising
out of, or with respect to, this Agreement or any judgment entered by any court
in respect thereof shall be brought in the courts of Broward County, Florida or
in the U.S. District Court for the Southern District of Florida and each party
hereby irrevocably accepts and consents to the non-exclusive personal
jurisdiction of those courts for the purpose of any suit, action or proceeding.
In addition, each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any judgment entered by any court in respect thereof brought in
Broward County, Florida or the U.S. District Court for the Southern District of
Florida and hereby further irrevocably waives any claim that any suit, action or
proceedings brought in Broward County, Florida or in such District Court has
been brought in an inconvenient forum.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereunto have executed this Escrow
Agreement on the day and year first above written.
XXXXXXXXX INDUSTRIES, INC., a Delaware
corporation
By:
------------------------------------
Zivi X. Xxxxxx
President
BANNER AEROSPACE, INC., a Delaware
corporation
By:
------------------------------------
Xxxxx Xxxxxxxxx
Senior Vice President
ESCROW AGENT
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
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EXHIBIT B
FORM OF GUARANTY AGREEMENT
This Guaranty Agreement ("Guaranty") is entered into as of
________________, ____, by The Xxxxxxxxx Corporation, a Delaware corporation
(the "Guarantor"), in favor of Xxxxxxxxx Industries, Inc. ("Xxxxxxxxx").
R E C I T A L S
Xxxxxxxxx, Xxxxxx, Inc., a Florida corporation ("Solair") and Banner
Aerospace, Inc. ("Banner") have entered into that certain Stock Purchase
Agreement dated as of December __, 1998 (as the same may be amended from time to
time, the "Agreement"), pursuant to which Xxxxxxxxx purchased from Banner all of
the issued and outstanding shares of capital stock of Solair, subject to the
terms and conditions contained therein (the "Acquisition"). In connection with
the closing of the Acquisition, Five Million Dollars ($5,000,000) of the
purchase price was deposited in escrow (the "Escrowed Amount") to secure certain
obligations of Banner to Xxxxxxxxx arising under the Agreement. Banner is a
subsidiary of the Guarantor. As contemplated in the Agreement, Xxxxxxxxx and
Banner have agreed that [Insert amount equal to Four Million Five Hundred
Thousand Dollars ($4,500,000) plus all interest on the Escrowed Amount, less any
amount previously released to any party out of the Escrowed Amount] of the
Escrowed Amount is to be released to Banner upon the delivery to Xxxxxxxxx of
this Guaranty by the Guarantor.
TERMS OF THE AGREEMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, and as a material inducement to Xxxxxxxxx to consummate the
Acquisition, Guarantor agrees as follows:
1. Recitations. Each and all of the foregoing recitals are true and
correct and are incorporated herein by reference.
2. Guaranteed Obligations. Guarantor hereby absolutely, irrevocably
and unconditionally guarantees (as primary obligor and not merely as surety) to
Xxxxxxxxx and its successors and assigns, and all other Xxxxxxxxx Indemnified
Parties (as such term is defined in the Agreement), the full and prompt payment
of any and all Xxxxxxxxx Indemnifiable Damages (as such term is defined in the
Agreement) which Banner may be obligated to pay to any Xxxxxxxxx Indemnified
Party under Section 9.1 of the Agreement (collectively the "Guaranteed
Obligations"); provided, however, that in no event shall Guarantor's obligations
under this Guaranty exceed _______________ Dollars ($_______________) [Insert
amount equal to Four Million Five Hundred Thousand
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Dollars ($4,500,000) plus all interest on the Escrowed Amount, less any amount
previously released to any party out of the Escrowed Amount].
3. No Offset, Defenses, Counterclaims. Guarantor shall not be
entitled to any abatement, deferment, suspension, reduction, set-off, defenses
or counterclaim in respect of the Guaranteed Obligations, except to the extent
Banner is entitled to the same. The liability of the Guarantor under this
Guaranty shall remain in effect regardless of any law, regulation, or decree now
or hereafter in effect in any jurisdiction which might in any manner affect any
of such terms or provisions or the rights of any of the Xxxxxxxxx Indemnified
Parties with respect thereto as against Banner and irrespective of the validity,
regularity or enforceability thereof, or of any defenses or rights of set off or
counterclaims which Guarantor may have or assert against any of the Xxxxxxxxx
Indemnified Parties, or of any other condition, contingency or circumstances
whatsoever, whether occurring prior to or after the date hereof, whether known
or unknown to the Guarantor or Banner or any of the Xxxxxxxxx Indemnified
Parties, and whether or not any of the same may or might vary the risk of affect
the rights or remedies of the Guarantor. The Guaranteed Obligations shall not be
reduced or discharged by any amendment or modification to the Agreement.
4. Guaranty of Payment; Right to Proceed Directly Against Guarantor.
This is an irrevocable, absolute, continuing guaranty of payment and not a
guaranty of collection; and the Guarantor waives any right to require that any
action be brought against Banner or any other person or to require that resort
be had to any security. Any of the Xxxxxxxxx Indemnified Parties may, at its
option, proceed against the Guarantor individually, in the first instance to
collect any monies the payment of which is guaranteed hereby, without first
proceeding against Banner or any other person, and without first resorting to
any security held by its as collateral or to any other remedies, at the same or
different times, as it may deem advisable; and the liability of the Guarantor
hereunder shall be in no way affected or impaired by an acceptance by any of the
Xxxxxxxxx Indemnified Parties of any security for, or other guarantors upon, any
indebtedness, liability or obligation of Banner to any of the Xxxxxxxxx
Indemnified Parties, or by any failure, delay, neglect or omission by any of the
Xxxxxxxxx Indemnified Parties to realize upon or protect any such indebtedness,
liability or obligation or any notes or other instruments evidencing same or any
collateral or security therefor. Notwithstanding the foregoing, (a) any
Guaranteed Obligations shall be first offset by Xxxxxxxxx against any available
Escrowed Amount (as defined in the Purchase Agreement) before demand is made by
any of the Xxxxxxxxx Indemnified Parties for payment therefor by the Guarantor,
and (b) in the event that Banner shall default in any of the Guaranteed
Obligations, any of the Xxxxxxxxx Indemnified Parties shall make written demand
on Banner for performance of such Guaranteed Obligations, which demand shall not
be satisfied within ten (10) days thereof or such longer period as may be
required under the Agreement, before demanding performance by the Guarantor of
such Guaranteed Obligations.
5. Consent to Extensions, Renewals and Releases. The Guarantor hereby
consents that any of the Xxxxxxxxx Indemnified Parties from time to time, before
or after any default by Banner, with or without further notice to or assent from
the Guarantor, may, without in any manner affecting the liability of Guarantor,
and upon such terms and conditions as it may deem advisable: (a) extend
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in whole or in part (by renewal or otherwise), modify, accelerate, change or
release any indebtedness, liability or obligation of Banner or of any other
person secondarily or otherwise liable for any indebtedness, liability or
obligation of Banner, or waive any default with respect thereto; and (b) settle,
adjust or compromise any claim of any of the Xxxxxxxxx Indemnified Parties
against Banner or any other person secondarily or otherwise liable for any
indebtedness, liability or obligation of Banner. Guarantor hereby ratifies and
confirms any such extension, renewal, change, release, waiver, surrender,
exchange, modification, impairment, substitution, settlement, adjustment or
compromise and agrees that the same shall be binding upon the Guarantor, and the
Guarantor hereby expressly waives any and all defenses, counterclaims or offsets
which it might or could have by reason thereof, it being understood that the
Guarantor shall at all times be bound by this Guaranty and remain liable to the
Xxxxxxxxx Indemnified Parties hereunder.
6. Termination of Guaranty. Notwithstanding anything to the contrary
contained in this Guaranty, Guarantor shall not be liable for any Guaranteed
Obligations unless the Xxxxxxxxx Indemnified Party seeking to collect hereunder
shall have made written demand on Banner for performance of such obligations on
or before [INSERT 18 MONTH ANNIVERSARY DATE OF THE CLOSING DATE UNDER THE
AGREEMENT].
7. Waivers by Guarantor. Except as otherwise expressly provided in
this Guaranty, Guarantor hereby waives: (a) notice of acceptance of this
Guaranty by Xxxxxxxxx, or of the creation, renewal or accrual of any liability
of Banner, present or future, or of the reliance of the Xxxxxxxxx Indemnified
Parties upon this Guaranty; (b) demand of payment from any person indebted in
any manner or for any of the liabilities or obligations hereby guaranteed; (c)
presentation for payment of any instrument of Banner or any other person,
protest thereof and notice of its dishonor to any party thereto and to
Guarantor; (d) any defense arising by virtue of (i) the lack of authority of
Guarantor or other party, or revocation hereof by Guarantor or any other party,
or (ii) the failure of any of the Xxxxxxxxx Indemnified Parties to file or
enforce a claim of any kind; (e) any defense based upon an election of remedies
by any of the Xxxxxxxxx Indemnified Parties which destroys or otherwise impairs
the subrogation rights of Guarantor or the right of Guarantor to proceed against
Banner for reimbursement, or both; and (f) any duty on the part of any of the
Xxxxxxxxx Indemnified Parties to disclose to Guarantor any facts which such
Xxxxxxxxx Indemnified Party may now or hereafter know about Banner, regardless
of whether such Xxxxxxxxx Indemnified Party has reason to believe that any such
facts materially increase the risk beyond that which Guarantor intends to assume
or has reason to believe that such facts are unknown to Guarantor or have a
reasonable opportunity to communicate such facts to Guarantor, it being
understood and agreed that Guarantor is fully responsible for being and keeping
informed of the financial condition of Borrower and of all circumstances bearing
on the risk of non-payment of all obligations hereby guaranteed.
8. Effect of Bankruptcy. In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, any of the Xxxxxxxxx Indemnified
Parties must rescind or restore any payment, or any part thereof, received by
any of the Xxxxxxxxx Indemnified Parties in satisfaction of the Guaranteed
Obligations,
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66
any prior release or discharge from the terms of this Guaranty given to
Guarantor by lender shall be without effect, and this Guaranty shall remain in
full force and effect.
9. Remedies. In the event that Guarantor shall fail to perform
promptly as herein provided, the Xxxxxxxxx Indemnified Parties shall have the
right to require performance by the Guarantor of any Guaranteed Obligations, by
action at law or in equity or both, and further to collect in any such action
reasonable compensation for all loss, costs, damage, injury and expense
sustained or incurred by such Xxxxxxxxx Indemnified Party as a consequence of
such breach.
10. Interest and Expenses of Enforcement. Guarantor agrees to pay any
and all costs and expenses incurred by any Xxxxxxxxx Indemnified Party in
enforcing any rights or remedies under this Guaranty, including, without
limitation, all reasonable fees and expenses of the Xxxxxxxxx Indemnified
Parties' attorneys (including paralegal fees), including reasonable fees and
expenses of any appeals and in any bankruptcy proceedings, regardless of whether
any specific legal proceedings should be commenced or initiated.
11. Consideration. Guarantor acknowledges that but for the delivery of
this Guaranty, Xxxxxxxxx would not have consented to release of the funds from
escrow.
12. No Waiver. No failure on the part of any Xxxxxxxxx Indemnified
Party to pursue any remedy hereunder or under the Agreement shall constitute a
waiver on its part of the right to pursue said remedy on the basis of the same
or a subsequent breach, nor shall failure give rise to an estoppel against the
Xxxxxxxxx Indemnified Parties, nor excuse Guarantor from its obligations
hereunder. No extension, substitution, modification, amendment or renewal of
either of the Agreement or the provisions hereof shall operate to discharge the
Guarantor from any obligation herein contained in whole or in part, except to
the extent expressly provided by Xxxxxxxxx in writing.
13. Guaranty Independent.
(1) Guarantor agrees that the obligations hereunder are
independent of and in addition to the undertakings of Banner pursuant to the
Agreement and any other obligations of Guarantor to the Xxxxxxxxx Indemnified
Parties. A separate action may be brought to enforce the provisions hereof
against Guarantor, whether or not Banner is a party in any such action. Banner
and/or Guarantor may be sued together, or any of them may be sued separately
without first or contemporaneously suing the other.
(2) Except as otherwise expressly provided in this Guaranty,
Guarantor waives any right to require any Xxxxxxxxx Indemnified Party to (i)
proceed against Banner, (ii) proceed against or exhaust any security held from
Banner (except as expressly provided herein), or (iii) pursue any remedy
whatsoever in the power of any Xxxxxxxxx Indemnified Party. Guarantor waives any
defense arising by reason of any disability or other defense of Banner or by
reason of the cessation from any cause whatsoever of the liability of Banner
other than full payment and performance of the Guaranteed Obligations. Guarantor
waives any defense Guarantor may acquire by reason of the election by any
Xxxxxxxxx Indemnified Party of any remedy against Guarantor or
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the Banner or both, even though Guarantor's rights of subrogation may thereby be
impaired or extinguished.
14. Subrogation. Guarantor hereby irrevocably waives all rights it may
have at law or in equity to seek contribution, indemnification, or any other
form of reimbursement from Solair for any payment or disbursement made by
Guarantor under or in connection with this Guaranty or otherwise. Guarantor
waives the benefit of, and any right to participate in, any security now or
hereafter held by any Xxxxxxxxx Indemnified Party from Banner.
15. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by Xxxxxxxxx, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which such waiver or consent has been given.
16. Notices, Demands and Other Instruments. All notices, offers,
acceptances, rejections, consents, requests and other communications hereunder
shall be in writing and shall be deemed to have been giving (i) when delivered
in person, or (ii) when sent by telecopier (with receipt confirmed), or (iii) on
receipt after being sent by express mail or delivery service guaranteeing
overnight delivery, provided that in each of (i), (ii) and (iii) a copy is
mailed by first class registered or certified mail, postage prepaid, return
receipt requested, in each case addressed as follows:
If to Guarantor: The Xxxxxxxxx Corporation
00000 Xxxxxxxx Xxxxx, Xxxxx #000
Xxxxxx, XX 00000-0000
Attn: General Counsel
Telecopier: (000) 000-0000
If to Xxxxxxxxx: Xxxxxxxxx Industries, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Zivi X. Xxxxxx, President
Telecopier: (000) 000-0000
With a Copy to: Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. March, Esq.
Telecopier: (000) 000-0000
or to such other person or address as any such party shall furnish by notice to
the other parties in writing. Notices need not be given or made by an officer of
either party but shall be deemed sufficiently given if made by the counsel of
such party, and all of such notices shall be deemed in compliance hereof
provided only that they be given in the manner specified herein.
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17. Agreements. Guarantor acknowledges that it is fully familiar with
the terms, provisions and conditions of the Agreements, and that its signature
on this Guaranty shall also serve as its consent to and approval of the terms
and provisions thereof, but shall not create any obligations thereunder, except
as set forth herein.
18. Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Banner as debtor, for so long as any Guaranteed Obligations remain
unpaid, any Xxxxxxxxx Indemnified Party shall have the right to prove its claim
in any such proceeding so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian any dividends and
payments which would otherwise be payable to Guarantor to satisfy any unpaid
Guaranteed Obligations. Guarantor hereby assigns such dividends and payments to
Xxxxxxxxx.
19. Rights to Specific Performance. Each of the Xxxxxxxxx Indemnified
Parties shall have, and may exercise, in addition to all other rights,
privileges, or remedies available to it under this Guaranty and by law, the
specific rights and remedies, exercisable by it in its discretion, to xxx for
and obtain specific performance by the Guarantor of the Guarantor's covenants
and agreements set forth herein, all at the cost and expense of the Guarantor.
20. Miscellaneous.
(1) Time is of the essence hereof with respect to the
Guaranteed Obligations hereunder.
(2) If any term, provision, covenant or condition hereof or any
application thereof should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all terms, provisions, covenants and conditions
hereof, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
(3) The use of the words "herein", "hereof", "hereunder" and
any other words of similar import refer to this Guaranty as a whole and not to
any particular paragraph, subparagraph or other subdivision of this Guaranty
unless specifically noted otherwise in this Guaranty.
(4) The title of this Guaranty and the headings of the
paragraphs of this Guaranty are for convenience of reference only, and are not
to be considered a part of the substance of this Guaranty, and shall not limit
or expand or otherwise affect any of the terms hereof.
(5) In this Guaranty, wherever the context so requires, the
neuter gender includes the masculine and/or feminine gender, the singular
numbers include the plural, and the plural numbers include the singular.
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(6) This Guaranty creates a continuing obligation for the term
hereof and the obligation of Guarantor hereunder shall be binding upon Guarantor
and its successors, heirs, representatives and assigns, and shall inure to the
benefit of and be enforceable by Xxxxxxxxx and its successors and assigns and
each of the other Xxxxxxxxx Indemnifiable Parties (each of which shall be deemed
a third party beneficiary with full rights hereunder as if it were a party
hereto).
(7) GUARANTOR AND XXXXXXXXX DO HEREBY KNOWINGLY VOLUNTARILY,
INTENTIONALLY, UNCONDITIONALLY AND IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENTS EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON OR PARTY AND RELATED TO
THIS TRANSACTION; THIS IRREVOCABLE WAIVER OF THE RIGHT TO A JURY TRIAL BEING A
MATERIAL INDUCEMENT FOR XXXXXXXXX TO CONSUMMATE THE ACQUISITION AND TO ACCEPT
THIS GUARANTY.
(8) This Guaranty shall be construed in accordance with and
governed for all purposes by the laws of the State of Florida applicable to
contracts executed and to be wholly performed within such State. Any suit,
action or proceeding arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof may be brought in the courts of
Broward County, Florida or in the U.S. District Court for the Southern District
of Florida and each party hereby irrevocably accepts and consents to the
non-exclusive personal jurisdiction of those courts for the purpose of any suit,
action or proceeding. In addition, Guarantor hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any judgment entered by any court in respect
thereof brought in Broward County, Florida or the U.S. District Court for the
Southern District of Florida and hereby further irrevocably waives any claim
that any suit, action or proceedings brought in Broward County, Florida or in
such District Court has been brought in an inconvenient forum.
IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the
day and year first above written.
THE XXXXXXXXX CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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EXHIBIT C
FORM OF TAX AGREEMENT
THIS AGREEMENT is made this ___ day of __________, 199__ (the "Closing
Date"), by and between BANNER AEROSPACE, INC., a Delaware corporation ("BAR"),
and XXXXXXXXX INDUSTRIES, INC., a Delaware corporation ("KST").
WHEREAS, BAR currently owns all of the outstanding common stock of
SOLAIR, INC., a Florida corporation ("Solair");
WHEREAS, Solair will be included for periods on and before the Closing
Date in a consolidated Federal Income Tax Return including BAR filed for an
affiliated group (within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended ("Code"));
WHEREAS, BAR, Solair and KST have signed a Stock Purchase Agreement on
November ___, 1998 ("Stock Agreement") under which, inter alia, KST will
purchase shares of Solair from BAR;
WHEREAS, Solair will be included in the consolidated Federal Income Tax
Return of KST filed for an affiliated group (within the meaning of Section 1504
of the Code) for periods after the Closing Date;
WHEREAS, BAR, KST and Solair desire to enter into an agreement providing
for payments among BAR, KST and Solair with respect to certain tax benefits and
for indemnification with respect to certain tax liabilities;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto, intending to be
legally bound, agree as follows:
1. Definitions/Operating Rules.
(1) This Agreement supplements the Stock Agreement. If any
provision of this Agreement is inconsistent with the same matter dealt with in
the Stock Agreement, the Stock Agreement controls.
(2) Unless otherwise defined herein, any capitalized term used
in this Agreement has the meaning it has in the Stock Agreement.
(3) This Agreement applies to Taxes.
2. Tax Indemnification
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(1) In accordance with Section 4.19 and Section 6.20 of the
Stock Agreement, BAR is unconditionally liable to KST, and shall pay and
indemnify KST, for Taxes of Solair (and its Subsidiaries) attributable to (i)
Pre-Closing Periods, and (ii) a Straddle Period to the extent attributable to
periods on or before the Closing Date. Such Taxes include, but are not limited
to, Taxes paid or payable by Solair by virtue of Section 1.1502-6 of the
Treasury Regulations (or any similar provision of foreign, state or local law)
and any Tax arising on the Closing Date by reason of Solair ceasing to be a
member of the consolidated group including BAR (such as the triggering of
deferred intercompany transactions or recapture of excess loss accounts). In the
case of any Taxes that are imposed on a periodic basis and are payable for a Tax
period that is a Straddle Period, the portion of such Tax which relates to the
portion of such period ending on the Closing Date shall (x) in the case of any
Taxes other than Taxes based upon or related to income or receipts, be deemed to
be the amount of such tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (y) in the case of any Tax based upon or related to income or
receipts be deemed equal to the amount which would be payable if the relevant
Tax period ended on the Closing Date. Any credits relating to a Tax period that
is a Straddle Period shall be taken into account as though the relevant Tax
period ended on the Closing Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of Solair and its Subsidiaries.
(2) KST shall pay BAR the amount of any Tax benefit realized by
the KST Group for any Post-Closing Period as a result of a final disallowance of
any loss, deduction, or credit claimed by Solair in a Pre-Closing Period and the
allowance of such deduction or credit in a Post-Closing Period (or as a result
of a final determination that additional income is to be recognized in a
Pre-Closing Period in lieu of income which had been recognized in a Post-Closing
Period). Such payment shall be limited in all cases to the Tax benefit realized.
The Tax benefit shall be payable without interest unless the Tax benefit is a
Tax refund which includes interest, in which case, the Tax refund including
interest shall be paid to BAR when received. The Designated Accountants shall
prepare a calculation of the payment within thirty (30) days of the filing of
the Tax Return or a final determination or settlement with respect to an audit
for the taxable year or period in which the Tax benefit is realized by the KST
Group, and deliver such calculation to BAR (the "Tax Payment Certificate"). The
procedures set forth in Section 2.4 of the Stock Agreement shall apply to
resolve any differences as to the amount of the tax payment to BAR by
substituting "Tax Payment Certificate" for "Closing Date Payment Certificate"
therein and by substituting other words as the context requires. The KST Group
is not required to take any action to preserve the Tax benefit described in this
Paragraph B(2) other than by timely filing amended Tax Returns.
(3) Notwithstanding any other representation and warranty or
other provision in the Stock Agreement or this Agreement, any reduction in tax
payable by KST and Solair for a Post-Closing Period as a result of utilization
of net operating loss carryforwards or tax credit carryforwards of Solair
originating in a Pre-Closing Period shall not result in any payment by KST to
BAR for any of the reduction in actual tax otherwise payable by KST. All
carryforwards and carrybacks shall be utilized in the order provided by the Code
and Treasury Regulations thereunder. Notwithstanding any other representation
and warranty or other provision in the Stock Agreement
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or this Agreement, BAR makes no representation or warranty as to (i) the amount
of any net operating loss and tax credits of the BAR Group allocable to Solair
on the Closing Date; (ii) the amount of any net operating loss and tax credit of
Solair that will be utilized by other members of the BAR Group before the
Closing Date; and (iii) the amount of any reduction in tax payable by KST due to
utilization of any net operating loss and tax credit of the BAR Group allocable
to Solair as a result of the operations of Solair prior to the Closing Date.
(4) Any reduction in Tax payable by the BAR Group as a result
of the allowance of any additional loss, deduction, or credit claimed by Solair
on a claim for refund or amended Return filed after the Closing Date for a
Pre-Closing Period shall result in payment by BAR to KST of an amount equal to
the increase in actual tax otherwise payable by the KST Group caused by the
allowance of the loss, deduction or credit claimed by the BAR Group. The
procedures and timing set forth in Paragraph B(2) shall apply to the payment set
forth in this Paragraph B(4). This Paragraph B(4) shall also apply to items
described in Section 4.19(s) whether the items described therein arise before or
after the Closing Date
(5) Any Tax refund received by the BAR Group as a result of
utilization of net operating losses or Tax credits of Solair that originate in a
Post-Closing Period shall result in payment by BAR to KST of the amount of such
refund. BAR shall pay such amount at the time such refund is received. BAR will
cooperate with KST in filing any claims for refund and will cause the filing of
such claims by the BAR Group. BAR is not required to take any action to reduce
its taxes to the extent such reduction causes a permanent tax detriment to the
BAR Group.
(6) Except as provided in Paragraph B(5), all Tax refunds
received by KST and Solair after the Closing Date for any Pre-Closing Period
shall be promptly paid by KST and Solair to BAR. BAR shall indemnify and repay
such Tax refund to KST or Solair in the event a Governmental Authority recovers
such Tax refund from KST or Solair, whether the recovery is by repayment to such
Governmental Authority or by way of set-off against other Tax reductions arising
in the KST Group for Post-Closing Periods. KST shall similarly indemnify and
repay BAR for any Tax refund paid by BAR to KST in accordance with Paragraph
B(5).
3. Governing Law
This Agreement shall be governed by the laws of the State of
Florida.
4. Miscellaneous Provisions
(1) This Agreement is binding upon the assigns, transferees or
successors of the parties.
(2) The BAR Group includes any corporation included in a
consolidated, combined or unitary Tax Return including BAR.
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(3) The KST Group includes any corporation in a consolidated,
combined or unitary Tax Return including Solair.
(4) This Agreement and the Stock Agreement shall not prevent
KST from bringing an action for damages against BAR by reason of BAR breaching a
warranty or covenant of such Agreements even though BAR is not the common parent
of the BAR Group and such common parent is not a party to such Agreements.
(5) Neither the Xxxxxxxxx Indemnification Threshold set forth
in Section 9.1 of the Stock Agreement nor the Shareholder Indemnification
Threshold set forth in Section 9.2 of the Stock Agreement shall apply with
respect to the parties' obligations under this Agreement relating to Income
Taxes. The Xxxxxxxxx Indemnification Threshold and the Shareholder
Indemnification Threshold shall, however, each apply to Non-Income Taxes and, by
way of clarification, this Agreement does not require one party to indemnify or
pay another party with respect to Indemnifiable Damages with respect to
Non-Income Taxes unless the applicable such threshold shall have been exceeded
under the Stock Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
XXXXXXXXX INDUSTRIES, INC.
By:
--------------------------------
Title
BANNER AEROSPACE, INC.
By:
--------------------------------
Title
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EXHIBIT D
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE OR SECURITIES LAWS
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
XXXXXXXXX INDUSTRIES, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. BAI-1 300,000 Shares
FOR VALUE RECEIVED, Xxxxxxxxx Industries, Inc., a Delaware corporation
(the "Company"), hereby certifies that Banner Aerospace, Inc. (the "Purchaser")
or its permitted assigns, is entitled to purchase from the Company, at any time
or from time to time commencing on the date hereof (the "Commencement Date") and
prior to 5:00 P.M., New York City time, on _______, ______ [FOURTH ANNIVERSARY
OF CLOSING DATE], Three Hundred Thousand (300,000) fully paid and non-assessable
shares of the common stock, $.001 par value per share, of the Company for an
aggregate purchase price of $8,250,000 (computed on the basis of $27.50 per
share). (Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to individually as a "Warrant Share" and
collectively as the "Warrant Shares," (iii) the aggregate purchase price payable
for the Warrant Shares hereunder is referred to as the "Aggregate Warrant
Price," (iv) the price payable for each of the Warrant Shares hereunder is
referred to as the "Per Share Warrant Price," (v) this Warrant, and all Warrants
hereafter issued in exchange or substitution for this Warrant or such similar
Warrants are referred to as the "Warrants" and (vi) the holder of this Warrant
is referred to as the "Holder" and the holder of this Warrant and all other
Warrants or Warrant Shares issued upon the exercise of any Warrant are
75
referred to as the "Holders"). The Per Share Warrant Price is subject to
adjustment as hereinafter provided; in the event of any such adjustment, the
number of Warrant Shares shall be adjusted by dividing the Aggregate Warrant
Price by the Per Share Warrant Price in effect immediately after such
adjustment.
1. Exercise of Warrant. (a) This Warrant may be exercised in whole at
any time or in part from time to time, beginning on the Commencement Date and
prior to 5:00 P.M., New York City time, on _______, ______ [FOURTH ANNIVERSARY
OF CLOSING DATE]. Exercise of this Warrant by the Holder shall be made by the
surrender of this Warrant (with the subscription form at the end hereof, or a
reasonable facsimile thereof, duly executed) at the address set forth in
Subsection 11(a) hereof, together with proper payment of the Aggregate Warrant
Price, or the proportionate part hereof if this Warrant is exercised in part.
Payment for Warrant Shares shall be made by certified or official bank check
payable to the order of the Company. If this Warrant is exercised in part, this
Warrant must be exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Warrant covering the Warrant Shares
which have not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in the
name of Holder (or any designee of the Holder to whom the Warrant is transferred
in accordance with Section 6 hereof) for the largest number of whole shares of
the Common Stock to which the Holder shall be entitled and, if this Warrant is
exercised in whole, in lieu of any fractional share of the Common Stock to which
the Holder shall be entitled, pay to the Holder cash in an amount equal to the
fair value of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine), and (b) deliver the other
securities and properties receivable upon the exercise of this Warrant, or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
(b) Notwithstanding Section 1(a), at any time prior to the
Expiration Date of any Warrants, the Warrantholder may, at its option, exchange
such warrants, in whole or in part, (a "Warrant Exchange"), into the number of
fully paid and non-assessable Warrant Shares determined in accordance with this
Section 1(b), by surrendering the Warrant Certificate relating to such Warrants
to the Company, accompanied by a notice stating such Warrantholder's intent to
effect such exchange, the number of Warrant Shares to be exchanged and the date
on which the Warrantholder requests that such Warrant Exchange occur (the
"Notice of Exchange"). The Warrant Exchange shall take place on the date
specified in the Notice of Exchange (the "Exchange Date"). Certificates for the
Warrant Shares issuable upon such Warrant Exchange and, if applicable, a new
Warrant Certificate of like tenor evidencing the balance of the Warrant Shares
remaining subject to the Warrantholders' Warrant Certificate, shall be issued as
of the Exchange Date and delivered to the Warrantholder within three days
following the Exchange Date. In connection with any Warrant Exchange, the
Warrantholder's Warrant Certificate shall represent the right to subscribe for
and acquire the number of Warrant Shares (rounded to the nearest number of
Warrant Shares) equal to (A) the number of Warrant Shares specified by the
Warrantholder in its Notice of Exchange (the "Total Share Number") less (B) the
number of Warrant Shares equal to the quotient obtained by dividing (i) the
product of the Total Share Number and the existing Exercise Price per Warrant
Share
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by (ii) the Market Price of a share of Common Stock. For purposes of this
Section 1(b), "Market Price" shall have the meaning ascribed to such term in
Section 3(i) of this Warrant.
2. Reservation of Warrant Shares; Listing. The Company agrees that,
prior to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of Common Stock and other
securities and properties as from time to time shall be receivable upon the
exercise of this Warrant, free and clear of all restrictions on sale or transfer
and free and clear of all preemptive rights and rights of first refusal, (b) if
the Company hereafter lists its Common Stock on any national securities
exchange, keep the shares of the Common Stock receivable upon the exercise of
this Warrant authorized for listing on such exchange upon notice of issuance,
and (c) if the Common Stock is not listed on a national securities exchange,
maintain the Common Stock listed on NASDAQ such that Warrant Shares are
authorized for trading on NASDAQ.
3. Protection Against Dilution. (a) In case the Company shall
hereafter (i) pay a dividend or make a distribution on its capital stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Per Share Warrant
Price shall be adjusted so that the Holder upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or other capital stock
of the Company which it would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. An adjustment made
pursuant to this Subsection 3(a) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(b) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute to the holders of shares of
Common Stock evidences of its indebtedness, any other securities of the Company
or any cash, property or other assets (excluding a subdivision, combination or
reclassification, or dividend or distribution payable in shares of Common Stock,
adjustment for which would be made pursuant to Subsection 3(a), and also
excluding cash dividends or cash distributions paid out of net profits legally
available therefor and accrued after the date hereof if the full amount thereof
is equivalent to not more than an amount equal to 10% of the Company's net
worth) (any such nonexcluded event being herein called a "Special Dividend"),
the Per Share Warrant Price shall be adjusted by multiplying the Per Share
Warrant Price then in effect by a fraction, the numerator of which shall be the
then current market price of the Common Stock (defined as the average for the
thirty consecutive business days immediately prior to the record date of the
daily closing price of the Common Stock as reported by the national securities
exchange upon which the Common Stock is then listed or if not listed on any such
exchange, the average of the closing prices as reported by Nasdaq National
Market, or if not then listed on the Nasdaq National Market, the average of the
highest reported bid and lowest reported asked prices as reported by NASDAQ, or
if not then publicly traded, the fair market price as determined by the
Company's Board of Directors) less the fair market value (as determined in
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good faith by the Company's Board of Directors) of the evidences of
indebtedness, cash, securities or property, or other assets issued or
distributed in such Special Dividend applicable to one share of Common Stock and
the denominator of which shall be such then current market price per share of
Common Stock. An adjustment made pursuant to this Subsection 3(b) shall become
effective immediately after the record date of any such Special Dividend.
(c) In case of any capital reorganization or reclassification,
or any consolidation or merger to which the Company is a party other than a
merger or consolidation in which the Company is the continuing corporation, or
in case of any sale or conveyance to another entity of the property of the
Company as an entirety or substantially as an entirety, or in the case of any
statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Company), the Holder of this Warrant shall have the right thereafter to receive
on the exercise of this Warrant the kind and amount of securities, cash or other
property which the Holder would have owned or have been entitled to receive
immediately after such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and in any such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Section 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the exercise of
this Warrant. The above provisions of this Subsection 3(c) shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of any shares of stock or
other securities or property thereafter deliverable on the exercise of this
Warrant shall be responsible for all of the agreements and obligations of the
Company hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so proposed to be made, shall be mailed to the Holder of the Warrants
not less than 15 days prior to such event. A sale of all or substantially all of
the assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(d) No adjustment in the Per Share Warrant Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; provided, however, that any adjustments
which by reason of this Subsection 3(d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment; provided
further, however, that adjustments shall be required and made in accordance with
the provisions of this Section 3 (other than this Subsection 3(d)) not later
than such time as may be required in order to preserve the tax-free nature of a
distribution to the Holder of this Warrant or Common Stock issuable upon
exercise hereof. All calculations under this Section 3 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
in this Section 3 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Per Share Warrant Price, in addition to those
required by this Section 3, as it in its discretion shall deem to be advisable
in order that any stock dividend, subdivision of shares or distribution of
rights to purchase stock or
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securities convertible or exchangeable for stock hereafter made by the Company
to its stockholders shall not be taxable.
(e) If the Board of Directors of the Company shall (i) declare
any dividend or other distribution with respect to the Common Stock, other than
a cash dividend subject to the first parenthetical in Subsection 3(b), (ii)
offer to the holders of shares of Common Stock any additional shares of Common
Stock, any securities convertible into or exercisable for shares of Common Stock
or any rights to subscribe thereto, or (iii) propose a dissolution, liquidation
or winding up of the Company, the Company shall mail notice thereof to the
Holders of the Warrants not less than 15 days prior to the record distribution,
offer or subscription right or to vote on such dissolution, liquidation or
winding up.
(f) If, as a result of an adjustment made pursuant to this
Section 3, the Holder of any Warrant, thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of any Warrant promptly after such adjustment)
shall in good faith determine the allocation of the adjusted Per Share Warrant
Price between or among shares or such classes of capital stock or shares of
Common Stock and other capital stock.
(g) If at any time or from time to time the Company shall take
any action affecting its Common Stock or any other capital stock of the Company,
not otherwise described in any of the foregoing subsections of this Section 3,
then, if the failure to make any adjustment would in the reasonable opinion of
the Board of Directors of the Company have a materially adverse effect upon the
rights of the Holder of the Warrant, the number of shares of Common Stock or
other stock comprising a Warrant Share, or the Per Share Warrant Price, shall be
adjusted in such manner and at such time as the Board of Directors of the
Company may in good faith determined to be equitable under the circumstances.
(h) Whenever the Per Share Warrant Price is adjusted as
provided in this Section 3 and upon any modification of the rights of the Holder
of Warrants in accordance with this Section 3, the Company shall promptly cause
its Chief Financial Officer to provide a notice to the Holder setting forth the
Per Share Warrant Price and the number of Warrant Shares after such adjustment
or the effect of such modification, a brief statement of the facts requiring
such adjustment or modification and the manner of computing the same.
(i) If at any time after the date of this Agreement, the
Company shall issue or sell any share of Common Stock at a price per share of
Common Stock that is lower than the Market Price per share of Common Stock in
effect immediately prior to such sale or issuance, the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance, and the denominator of which shall be sum of (A) the
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number of shares of Common Stock outstanding immediately prior to such sale or
issuance, plus (B) the number of shares of Common Stock which the aggregate
consideration received by the Company for such sale or issuance would purchase
at such Market Price per share of Common Stock. Such adjustment shall be made
successively whenever such Common Stock are issued or sold and shall be
effective immediately after such issuance or sale. This Section (i) does not
apply to: (1) the conversion or exchange of other securities convertible or
exchangeable for Common Stock; provided that the exercise price of such
securities was not less than the Market Price of the Common Stock at the time of
issuance of such security; (2) Common Stock issued upon the exercise of rights
or Warrants; and (3) Common Stock issued in a bona fide public offering pursuant
to a firm commitment underwriting. For purposes of this Section, (a) "Market
Price" at any date shall be deemed to be the (x) last reported sale price, or,
in case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed and admitted to trading quoted or by the Nasdaq Stock Market,
National Market ("Nasdaq"), or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted by Nasdaq, the average
closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through Nasdaq or a similar organization if Nasdaq is no
longer reporting such information, of (y) if the Common Stock is not quoted on
Nasdaq, as determined in good faith by resolution of the Board of Directors of
the Company (A) taking into account the most recently completed arms-length
transaction between the Company and a person other than an Affiliate of the
Company the closing of which shall have occurred within the thirty-day period
preceding the date the Market Price is determined, or (B) if no transaction
shall have occurred during such thirty-day period, taking into account the fair
market value of the security as determined by an Independent Financial Expert,
and (b) "Independent Financial Expert" means a United States investment banking
or valuation firm of national or regional standing in the United States (i)
which does not, and whose directors, officers and employees or Affiliates do not
have a direct or indirect material financial interest for its proprietary
account in the Company or any of its Affiliates and (ii) which, in the judgment
of the Board of Directors of the Company, is otherwise independent with respect
to the company and its Affiliates and qualified to perform the task of which it
is to be engaged.
4. Fully Paid Stock; Taxes. The Company agrees that the shares of the
Common Stock, or any other capital stock, represented by each and every
certificate for Warrant Shares delivered on the exercise of this Warrant shall,
at the time of such delivery, be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive rights or rights of first refusal,
and the Company will take all such actions as may be necessary to assure that
the par value or stated value, if any, per share of the Common Stock is at all
times equal to or less than the then Per Share Warrant Price. The Company
further covenants and agrees that it will pay, when due and payable, any and all
Federal and state stamp, original issue or similar taxes which may be payable in
respect of the issue of any Warrant Share or certificate therefor.
5. Registration Under Securities Act of 1933.
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(a) The Company agrees that if, at any time and from time to
time during the period beginning on the Commencement Date and ending on the
second anniversary of the date the Warrants are exercised in full, the Board of
Directors of the Company shall authorize the filing of a registration statement
(any such registration statement being hereinafter called a "Registration
Statement") under the Act (other than a registration statement on Form S-4 or
Form S-8 or other form which does not include substantially the same information
as would be required in a form for the general registration of securities) in
connection with the proposed offer of any of its securities by the Company or
any of its stockholders, the Company will (i) promptly notify the Holder and
each of the Holders, if any, of other Warrants and/or Warrant Shares not
previously sold pursuant to this Section 5 that such Registration Statement will
be filed and that the Warrant Shares which are then held, and/or which may be
acquired upon the exercise of the Warrants, by the Holder and such Holders,
will, at the Holder's and such Holder's request, be included in such
Registration Statement, (ii) upon the written request of a Holder made within 15
days after the giving of such notice by the Company, include in the securities
covered by such Registration Statement all Warrant Shares which it has been so
requested to include, (iii) use its best efforts to cause such Registration
Statement to become effective as soon as practicable and (iv) take all other
action necessary under any Federal or state law or regulation of any
governmental authority to permit all Warrant Shares which it has been so
requested to include in such Registration Statement to be sold or otherwise
disposed of, and will maintain such compliance with each such Federal and state
law and regulation of any governmental authority for the period necessary for
the Holder and such Holders to effect the proposed sale or other disposition.
(b) The Company agrees that if, at any time during the period
commencing on the six (6) month anniversary of the Commencement Date and ending
on the second anniversary of the date the Warrants are exercised in full, the
Holder and/or the Holders of Warrants and/or Warrant Shares who or which shall
hold not less than 50% of the aggregate number of Warrants and Warrant Shares
outstanding at such time (the "Covered Warrant Shares") shall request that the
Company file a registration statement under the Act covering not less than 50%
of the Covered Warrant Shares, the Company will (i) promptly notify each Holder
of the Warrants and each Holder of Warrant Shares not so previously sold that
such registration statement will be filed and that the Warrant Shares which are
then held, and /or may be acquired upon exercise of the Warrants by the Holder
and such Holders, will be included in such registration statement at the
Holder's and such Holders' request, (ii) cause such registration statement to be
filed with the Securities and Exchange Commission (the "Commission") as soon as
possible following such request and to cover all Warrant Shares which it has
been so requested to include, (iii) use its best efforts to cause such
registration statement to become effective as soon as practicable and (iv) take
all other action necessary under any Federal or state law or regulation of any
governmental authority to permit all Warrant Shares which it has been so
requested to include in such registration statement to be sold or otherwise
disposed of, and will maintain such compliance with each such Federal and state
law and regulation of any government authority for the period necessary for such
Holder to effect the proposed sale or other disposition. The Company shall be
required to effect a registration or qualification pursuant to this Subsection
5(b) on one occasion only; provided that a request for registration shall not be
deemed to constitute a registration pursuant to this Subsection 5(b) if: (i) the
conditions to closing
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specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied other than by reason of some
act or omission by the Holder; (ii) the Company voluntarily takes any action
that would result in the Holder not being able to sell such Warrant Shares
covered thereby; (iii) the Holder determines not to proceed following any delay
imposed hereunder by the Company; provided, however, that prior to such delay,
the Holder shall not have sold more than ninety percent (90%) of the Warrant
Shares included in such registration; or (iv) other than by action of the
Holder, such registration does not remain effective for ninety (90) days or
more. Notwithstanding the foregoing, (a) if the Holder exercises its right to
request that a registration statement be filed pursuant to this Subsection 5(b)
at a time when the Company in good faith as evidenced by a Board resolution
believes that a public offering of Common Stock would materially impair a
pending financing or other material transaction of the Company, the Company
shall have the right to defer filing a Registration Statement hereunder for a
period not to exceed 90 days or (b) in lieu of causing a registration statement
to be filed under this Section 5(b), the Company may elect, by providing written
notice (the "Repurchase Notice") to the Holder or Holders requesting
registration within ten (10) days of the Company's receiving such request, to
repurchase from the requesting Holder or Holders either (x) the Warrants
relating to the Warrant Shares requested to be registered, at a price per
Warrant equal to the difference between the Market Price per share of the Common
Stock (as defined below) and the Per Share Warrant Price or (y) if the Warrants
relating to the Warrant Shares requested to be registered had already been
exercised, such Warrant Shares at a price per Warrant Share equal to the Market
Price per share of the Common Stock. As used in this Section 5(b), the "Market
Price per share of the Common Stock" shall mean the average of the last sale
price of the Common Stock, or if no last sale price is reported, the average of
the asked and bid prices of the Common Stock, on the Nasdaq National Market or
Nasdaq Small Cap Market, as applicable, for the 20 consecutive trading days
ending on the day prior to the delivery by the Holder or Holders of the request
for a registration statement pursuant to this Section 5(b). Any repurchase of
the Warrants or the Warrant Shares under this Section 5(b) shall be made within
15 days of the delivery by the Company of the Repurchase Notice.
(c) Whenever the Company is required pursuant to the provisions
of this Section 5 to include Warrant Shares in a registration statement, the
Company shall (i) furnish each Holder of any such Warrant Shares and each
underwriter of such Warrant Shares with such copies of the prospectus, including
the preliminary prospectus, conforming to the Act (and such other documents as
each such Holder or each such underwriter may reasonably request) in order to
facilitate the sale or distribution of the Warrant Shares, (ii) use its best
efforts to register or qualify such Warrant Shares under the blue sky laws (to
the extent applicable ) of such jurisdiction or laws (to the extent applicable)
of such jurisdiction or jurisdictions as the Holders of any such Warrant Shares
and each underwriter of Warrant Shares being sold by such Holders shall
reasonably request and (iii) take such other actions as may be reasonably
necessary or advisable to enable such Holders and such underwriters to
consummate the sale or distribution in such jurisdiction or jurisdictions in
which such Holders shall have reasonably requested that the Warrant Shares be
sold.
(d) The Company shall furnish to each Holder participating in
an offering pursuant to a registration statement under this Section 5 and to
each underwriter, if any, a signed
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counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
"comfort" letter dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, a letter dated
the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountant's letter with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(e) The Company shall enter into an underwriting agreement with
the managing underwriters selected by Holders holding 50% of the Covered Warrant
Shares requested to be included in a registration statement filed pursuant to
Section 5(b). Such agreement shall be reasonably satisfactory in form and
substance to the Company, each Holder and such managing underwriters, and shall
contain such representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type as used by
the managing underwriters.
(f) The Company shall pay all expenses incurred in connection
with any registration statement or other action pursuant to the provisions of
this Section 5, other than underwriting discounts, applicable transfer taxes
relating to the Warrant Shares and the fees and expenses of counsel for the
Holders of the Warrant Shares.
(g) In connection with any public offering by the Company
involving an underwriting of its securities effected pursuant to Section 5(a)
hereof, the Company shall not be required to include in such registration any
Warrant Shares held by the Holder unless the Holder agrees to the terms of the
underwriting agreement between the Company and the managing underwriter of such
offering, which agreement may require that the Warrant Shares be withheld from
the market by the Holders for a period of up to 180 days after the effective
date of the registration statement by which such public offering is being
effected (or such longer period as may be requested by any securities exchange
upon which the Common Stock is then listed). Furthermore, the Company shall be
obligated to include in such registration only the quantity of Warrant Shares,
if any, as will not, in the opinion of the managing underwriter, jeopardize the
success of the offering by the Company. If the managing underwriter for the
offering advises the Company in writing that the total amount of securities
sought to be registered by the Holders and other shareholders of the Company
having similar registration rights as of the date thereof (collectively, the
"Xxxxxxxxx Shareholders") exceeds the amount of securities that can be offered
without adversely affecting the offering by the Company, then the Company may
reduce the number of shares to be registered by the Company for the Xxxxxxxxx
Shareholders, including Warrant Shares, to a number satisfactory
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to such managing underwriter. Any such reduction shall be pro rata, based upon
the total number of shares held by each Xxxxxxxxx Shareholder.
(h) The Company will indemnify and hold harmless the Holder and
any person or entity engaged by the Holder to sell the Holder's Warrant Shares,
and each person, if any, who controls such persons or entities within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act") (collectively, a "Holder Indemnitee"), against any losses, claims,
damages, liabilities or expenses (or actions, proceedings, or settlements in
respect thereof) (joint or several) to which a Holder Indemnitee may become
subject under the Act, the 1934 Act, or other federal or state law, insofar as
such losses, claims, damages, liabilities or expenses (or actions, proceedings
or settlements in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto; (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; or (iii) the employment by the Company of
any device, scheme or artifice to defraud or the engagement by the Company in
any act, practice or course of business which operates or would operate as a
fraud or deceit upon the purchasers of its securities pursuant to such
registration statement. The Company will also reimburse each Holder Indemnitee
for any legal or other expenses reasonably incurred by such Holder Indemnitee in
connection with investigating, defending, and settling any such loss, claim,
damage, liability, or action.
The indemnity agreement contained in this Subsection 5(h) shall not apply
to amounts paid in settlement of any loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable to any
Holder Indemnitee of any loss, claim, damage, liability or action (i) to the
extent that it arises solely out of or is based solely upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by or on behalf of the
Holder or any agent of the Holder, which consent shall not be unreasonably
withheld, or controlling person of either; or (ii) in the case of a sale
directly by the Holder (including a sale of such Warrant Shares through any
underwriter retained by such Holder to engage in a distribution solely on behalf
of such Holder), such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected in a
final or amended prospectus, and the Holder failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
Warrant Shares to the person asserting any such loss, claim, damage or liability
in any case where such delivery is required by the Act.
(i) The Holder will indemnify and hold harmless the Company,
each of its employees, officers, directors or persons who control the Company
within the meaning of the Act or the 1934 Act, and each agent or underwriter for
the Company or any other person or entity engaged by the Company to sell the
Company's securities offered in the registration statement, or any of their
respective directors, officers, partners, agents, employees or control persons
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84
(collectively, a "Company Indemnitee"), against any losses, claims, damages,
liabilities or expenses (joint or several) to which the Company or any such
Company Indemnitee may become subject under the Act, the 1934 Act, or other
federal or state law, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereto) arise solely out of or are based solely
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by or on behalf of the Holder expressly for use in
connection with such registration; and each Holder will reimburse any legal or
other expenses reasonably incurred by a Company Indemnitee in connection with
investigating or defending any such loss, claim, damage, liability, or action.
The indemnity agreement contained in this Subsection 5(i) shall not apply
to amounts paid in settlement of any loss, claim, damage, liability, or action
if such settlement is effected without the consent of the indemnifying Holder,
which consent shall not be unreasonably withheld, nor, in the case of a sale
directly by the Company of its securities (including a sale of such securities
through any underwriter retained by the Company to engage in a distribution
solely on behalf of the Company), shall the Holder be liable to the Company in
any case in which such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected in a
final or amended prospectus, and the Company failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
securities to the person asserting any such loss, claim, damage or liability in
any case where such delivery is required by the Act.
(j) Promptly after receipt by an indemnified party under
Subsections 5(h) or (i) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying part so desires, jointly with any other indemnifying party
similarly noticed, to assume and control the defense thereof with counsel
mutually satisfactory to the indemnified and indemnifying parties, provided that
the indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests (as reasonably
determined by either party) between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
Subsection 5(h) or (i), respectively, to the extent of such prejudice, but the
failure to so deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under Subsection 5(h) or (i), respectively.
(ii) The obligations of the Company and the Holders under
Subsections 5(h) and (i), respectively, shall survive the completion of any
offering of Warrant Shares made pursuant to a registration under this Agreement.
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85
(iii) The amount paid or payable by a party as a result of
the losses, claims, damages, or liabilities (or actions or proceedings in
respect thereof) referred to in Subsections 5(h) and (i) shall include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
(k) If the indemnification provided for in the preceding
Subsections 5(h) or (i) is unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall be
entitled to contribution, except to the extent that contribution is not
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity correct
and prevent any statement or omission, and any other equitable considerations
appropriate under the circumstances; provided, however that in no case shall any
Holder be required to contribute any amount in excess of the amount which such
Holder would be required to pay if the indemnification provided in this Section
were available. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(l) The Holder, in addition to being entitled to exercise all
rights provided in this Section 5, including recovery of damages, will be
entitled to specific performance of its rights hereunder. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Section 5 and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(m) In connection with the Company's obligations to effect a
registration under Section 5, the Company will:
(i) cooperate and assist in any filings required to be
made with the National Association of Securities Dealers, Inc., and before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to counsel selected by Holder copies of all
such documents proposed to be filed, which documents will be subject to their
review and comments;
(ii) cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act;
(iii) notify the Holder promptly (A) when the prospectus
or any prospectus supplement or post-effective amendment has been filed, and
with respect to the registration statement or any post-effective amendment, when
the same has become effective; (B) of any request by the Commission for any
amendments or supplements to the registration statement or the prospectus or for
additional information; (C) of the issuance by the Commission of any stop order
12
86
suspending the effectiveness of the registration statement or the initiation of
any proceedings for the purpose; (D) if, at any time prior to the closing
contemplated by an underwriting agreement entered into in connection with such
registration statement, that the representations and warranties of the Company
contained in such agreement cease to be true and correct in any material
respect; (E) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Warrant Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and (F) of the happening of any event which makes any statement made in
the registration statement, the prospectus of or any document incorporated
therein by reference untrue in any material respect and which requires the
making of any changes in the registration statement, the prospectus or any
document incorporated therein by reference in order to make the statement
therein not materially misleading;
(iv) make commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;
(v) if required, prepare a supplement or post-effective
amendment to the registration statement, the related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Warrant Shares, the prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(vi) cause all Warrant Shares covered by the registration
statement to be listed on each securities exchange on which identical securities
issued by the Company are then listed if requested by the Holder or the managing
underwriters, if any;
(vii) provide and cause to be maintained a transfer agent
and registrar for all Warrant Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(viii) use its best efforts to provide a CUSIP number for
the Warrant Shares, not later than the effective date of the registration
statement;
(ix) make available for inspection, in connection with
the preparation of a registration statement pursuant to this Agreement, by the
Holder, and any attorney or accountant retained by the Holder, all financial and
other records and pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, attorney or
accountant in connection with such registration; provided, however, that any
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such persons unless disclosure of
such records, information or documents is required by court or administrative
order;
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(x) if so required by the managing underwriter, not
sell, make any short sale of, loan, grant any option for the purpose of, effect
any public sale or distribution of or otherwise dispose of its equity securities
or securities convertible into or exchangeable or exercisable for any of such
securities during the ten days prior to and the 90 days after any underwritten
registration pursuant hereto has become effective, except as part of such
underwritten registration and except pursuant to registrations on Form S-4 or
S-8 or any successor or similar forms thereto, except that the Company may make
grants of options under its stock option plans and may issue securities issuable
upon the exercise or conversion of outstanding convertible securities, stock
options and other options, warrants and rights of the Company; and
(xi) otherwise use its best effort to comply with all
applicable rules and regulations of the Commission and make available to its
security holders as soon as reasonably practicable, an earnings statement which
satisfies the provision of Section 11(a) of the Act.
(n) The Company shall not be obligated to register any Warrant
Shares pursuant to this Section 5 at any time when the resale provisions of Rule
144 promulgated under the Act are available to the Holder without limitation as
to volume.
(o) The Company will use its reasonable best efforts to file
with the Commission all information required to be filed under Section 13 or
15(d) of the 1934 Act.
6. Limited Transferability. This Warrant may not be offered, sold,
transferred, assigned, hypothecated or otherwise disposed of by the Holder
except pursuant to an effective registration statement under the Act and/or
applicable state securities laws or an exemption from registration under the Act
and such laws which, in the opinion of counsel for the Holder, which counsel and
opinion are reasonably satisfactory to the Company, is available. The Company
may treat the registered Holder of this Warrant as he or it appears on the
Company's books at any time as the Holder for all purposes. The Company shall
permit any Holder of a Warrant or his or her duly authorized attorney, upon
written request during ordinary business hours, to inspect and copy or make
extracts from its books showing the registered holders of Warrants. All Warrants
issued upon the transfer or assignment of this Warrant will be dated the same
date as this Warrant, and all rights of the Holder thereof shall be identical to
those of the Holder.
7. Securities Act of 1933 Legend. This Warrant, the Warrant Shares
and any of the other securities issuable upon exercise of this Warrant have not
been registered under the Act. Upon exercise of this Warrant, in part or in
whole, the certificates representing the Warrant Shares and any of the other
securities issuable upon exercise of this Warrant shall bear the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE OR SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT
14
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PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF
COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
8. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
9. Warrant Holder Not Shareholder. Except as otherwise provided
herein, this Warrant does not confer upon the Holder any right to vote or to
consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
10. Information to Holder. The Company agrees that it shall deliver to
the Holder promptly after their becoming available copies of all financial
statements, reports and proxy statements which the Company shall have sent to
its stockholders generally.
11. Holder Information. For purposes of this Agreement, the parties
hereby agree that the only written information pertaining to a Holder in a
prospectus or registration statement shall be the Holders name and address and
such other information as shall be required to be disclosed under applicable
securities laws, rules or regulations, or the rules or regulations of any
exchange on which shares of Common Stock shall then be traded.
12. Notices. All notices and other communications required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally or by facsimile transmission, or
sent by recognized overnight courier or by certified mail, return receipt
requested, postage paid, to the parties hereto as follows:
(a) if to the Company at 0000 Xxxxxxxxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxx 00000, Att.: Chief Executive Officer, facsimile no. 000-000-0000, or
such other address as the Company has designated in writing to the Holder, or
(b) if to the Holder at 00000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000-0000, Att.: Xxxxxx X. Xxxxxxxxx, Senior Vice President
and Chief Operating Officer, or such other address as the Holder has designated
in writing to the Company.
13. Headings. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
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89
14. Applicable Law. This Warrant shall be governed by and construed in
accordance with the law of the State of Delaware without giving effect to the
principles of conflicts of law thereof. Venue shall be in Broward County,
Florida.
IN WITNESS WHEREOF, Xxxxxxxxx Industries, Inc. has caused this Warrant to
be signed by its President and its corporate seal to be hereunder affixed and
attested by its Chief Financial Officer as of the ____ day of _____, 199_.
XXXXXXXXX INDUSTRIES, INC.
By:
--------------------------------
Zivi X. Xxxxxx, President
ATTEST:
Chief Financial Officer
[Corporate Seal]
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90
ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto __________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer said Warrant on the books of
Xxxxxxxxx Industries, Inc.
Dated:
------------------------------------
Signature:
--------------------------------
Address:
---------------------------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby assigns and
transfers unto __________________________ the right to purchase __________
shares of Common Stock of ___________________________ covered by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
thereby, and does irrevocably constitute and appoint __________________________,
attorney, to transfer that part of said Warrant on the books of Xxxxxxxxx
Industries, Inc.
Dated:
------------------------------------
Signature:
--------------------------------
Address:
---------------------------
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91
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant pursuant to Section 1)
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
__________________ shares of Common Stock, as provided for in Section 1, and
tenders herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $________.
Please issue a certificate or certificates of such Common Stock in the
name of, and pay any cash for any fractional share to:
Name
-------------------------------------------
(Please Print Name, Address and Social Security
No.)
Address
----------------------------------------
----------------------------------------
Social
-----------------------------------------
Security Number
Signature
--------------------------------------
NOTE: The above signature should correspond
exactly with the name on the first
page of this Warrant or with the
name of the assignee appearing in
the assignment form below.
Date
-------------------------------------------
And if said number of shares shall not be all the shares purchasable
under the within Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder.
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92
EXHIBIT E
FORM OF RELEASE AGREEMENT
This RELEASE AGREEMENT ("Release") is executed as of the ____________ day
of _______________, 1998, by CITICORP USA, INC., a Delaware corporation, in its
capacity as Administrative Agent and a Lender under that certain Second Amended
and Restated Credit Agreement dated as of December 12, 1996, as amended (the
"Credit Agreement"), NATIONSBANK, N.A., in its capacity as a Lender under the
Credit Agreement, CITIBANK, N.A., in its capacity as Issuing Bank under the
Credit Agreement, SOLAIR, INC, a Florida corporation ("Solair"), and BANNER
AEROSPACE (U.K.) LIMITED, a company incorporated under the laws of the United
Kingdom and a subsidiary of Solair ("Solair U.K."). Capitalized terms used in
this Release and not otherwise defined herein but defined in the Credit
Agreement shall have the meanings ascribed thereto in the Credit Agreement.
WITNESSETH:
WHEREAS, Each of Solair and Solair U.K. is a party to the Credit
Agreement in the capacity of a Borrower thereunder, jointly and severally liable
with the other Borrowers thereunder for the Obligations and certain other Loan
Agreements executed and delivered in connection with the Credit Agreement;
WHEREAS, simultaneous with the execution and delivery of this Release all
of the issued and outstanding Capital Stock of Solair is being sold to Xxxxxxxxx
Industries, Inc., a Delaware corporation ("Xxxxxxxxx") as contemplated by that
certain Consent Letter dated December 1, 1998 entered into by and among the
Administrative Agent, the Lenders and the Borrowers and $52,000,000 of the
purchase price for the Solair Capital Stock is being remitted to the
Administrative Agent for application to the Obligations;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the parties hereto hereby acknowledges and agrees as
follows:
1. Incorporation of Premises. The premises set forth above are hereby
incorporated herein by this reference thereto as if fully set forth herein.
2. Mutual Releases. Upon execution and delivery of this Release by
the parties hereto, (a) each of the Administrative Agent, each Lender, and the
Issuing Bank hereby (x) fully and unconditionally releases each of Solair,
Solair U.K. and their respective successors and assigns, from all of their
obligations and liabilities under or in connection with the Credit Agreement and
other Loan Documents executed and delivered by either Solair or Solair U.K. in
connection therewith, and (y) waives any and all claims it may now or
hereinafter have against Solair, Solair U.K. or their respective successors and
assigns, arising out of or in any way relating to the Credit Agreement or
93
any other Loan Document, and (b) each of Solair and Solair U.K. hereby (x) fully
and unconditionally releases each of the Administrative Agent, each Lender and
the Issuing Bank, their successors and assigns, from all of their respective
obligations and liabilities under the Credit Agreement and other Loan Documents
executed and delivered by Solair or Solair U.K. in connection therewith, and (y)
waives any and all claims it may now or hereafter have against the
Administrative Agent, each Lender, the Issuing Bank or their respective
successors and assigns, arising out of or in any way relating to the Credit
Agreement or any other Loan Document.
3. Choice of Law; Severability. THIS RELEASE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Whenever
possible, each provision of this Release shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Release shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Release.
4. No Third Party Beneficiaries. This Release is executed for the
sole benefit of the parties hereto and their respective officers, directors,
employees, attorneys, affiliates, successors and assigns and no other Person
shall have any rights herein as a third party beneficiary or otherwise, except
to the extent specifically provided herein.
5. Effectiveness. This Release shall become effective on the date
first written hereinabove upon its execution and delivery by the parties hereto.
6. Counterparts. This Release may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same instrument. Delivery
of an executed counterpart of this Release by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
7. Section Titles. The section titles contained in this Release shall
be without substantive meaning or content of any kind whatsoever.
8. Entire Agreement. This Release constitutes the entire agreement
with respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter hereof.
[Signatures on next page]
94
IN WITNESS WHEREOF, the undersigned has duly executed this Release as of
the day and year first above written.
CITICORP USA, INC., NATIONSBANK, N.A.
as Administrative Agent as a Lender
and a Lender
By: By:
------------------------------------ --------------------------------
Xxxxxxx Xxxxxx Xxxxxxx X. Xxxxxxx
Attorney-in-Fact Senior Vice President
CITIBANK, N.A., SOLAIR, INC.
as Issuing Bank
By: By:
------------------------------------ --------------------------------
Xxxxxxx Xxxxxx Name:
Attorney-in-Fact ----------------------
Title:
----------------------
BANNER AEROSPACE (U.K.) LIMITED
By:
--------------------------------
Name:
----------------------
Title:
----------------------
